When Southwest Airlines considers expanding its flight service, Nashville is in the mix.

“Clearly Nashville is under consideration for any new service that we have,” said Southwest CEO Gary Kelly. “You all are a great destination for us. You’re one of our larger departure points.”

Kelly discussed Texas-based airline’s operations and service in Nashville as part of a larger presentation on Southwest's strategy and success when he spoke Wednesday to Nashville Area Chamber of Commerce members as part of the Chamber’s CEO Speaker Series. The event was timed to highlight Southwest Airlines’ June 2010 issue of its in-flight magazine, Spirit, which highlights Nashville as a featured destination.

“We are so proud to be a part of Nashville,” Kelly said. “We are so proud to be the largest carrier here. We think of ourselves as your hometown airline, and we’re going to try to earn that every single day.”

Southwest entered the Nashville community in 1986 with eight daily departures to two cities. Today, the airline offers 81 daily departures to 30 cities on a nonstop basis, with direct or connecting service to an additional 39 destinations.

Among those destinations is Panama City Beach, Fla., which Southwest began serving just weeks ago. So far, Kelly said demand for the flights has been strong, and he doesn’t expect the oil spill in the Gulf of Mexico to affect that.

“I’m not predicting we are going to see any effect from that, but to be honest with you, I just don’t know. That’s making a prediction about an unpredictable situation. But at least so far, we haven’t seen any changes in our traffic,” he said.

As the company looks at new markets — such as service to the Charleston, S.C. area, which is expected to launch next year — Nashville is always under consideration, Kelly said. He said he “guarantees” Nashville will see flights to Dallas’ Love Field when the airline can begin offering service there in 2014. Beyond that, the airline uses modeling tools and has analysts tracking the traffic and revenue of each market and potential new service sites.

“And we’ll make a judgment on that [destination] dependent on other competing priorities,” he said. “They’re all ranked in terms of how many passengers, what kind of revenues.”

Business dynamics

When adding service to places like Charleston, Southwest plans to continue “optimizing its flight schedule,” instead of adding to its fleet. By using that strategy in 2009 — analyzing flight volumes and schedules to match flights with demand— the company was able to add service to several cities without adding planes.

Those kinds of moves, as well as the company’s aggressive focus on customer service and controlling its operating costs, helped Southwest turn a modest profit last year, a time when many of its competitors recorded losses as economic pressures took a toll on passenger traffic.

“We just barely avoided our first annual last year that we had not seen since 1972,” he said.

Looking ahead

Results have been improving this year, he said, noting in the first quarter of 2010 of $24 million. The outlook for the year shows a very comfortable profit, he said.

Kelly said the company plans to continue its consumer-focused business approach, avoiding hidden fees and extra charges, like those for checked baggage. Bags “absolutely” will continue to fly free, he said.

Also look for Internet connectivity throughout the company’s fleet later this year. Installations will start this summer, Kelly said, though the result will look different from the WiFi technology currently in use at some of the company’s competitors. He said it may take longer to install, but should have a “more comprehensive offering.”

In addition, the company is working to upgrade its rapid rewards program next year, though he declined to give details.