updated 11/2/2006 12:45:04 PM ET 2006-11-02T17:45:04

Southwest Airlines Inc. escalated a fare war against American Airlines on Wednesday, announcing it would sell one-way tickets to and from Dallas for as low as $39.

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Southwest Chief Executive Gary C. Kelly said Southwest was treating its longtime home at Dallas Love Field as if it were just launching service there.

Kelly and other Southwest officials told reporters that the airline is adding flights in Phoenix and Orange County, Calif., and is considering expansion elsewhere, including Dallas and Philadelphia.

Southwest has enough planes on order from Boeing Co. to handle such growth, Kelly said, although it recently bought two used Boeing 737s and is looking for more.

Kelly said Southwest, which remained profitable even after the 2001 terror attacks caused massive losses at other carriers, doesn't plan to buy another carrier just to gain more airplanes. He said mergers increase the complexity of airline fleets and can cause labor troubles.

Southwest started in 1971 with three planes serving three Texas cities, and now has 476 planes flying to 63 airports.

It has, however, retained some of the simplicity long abandoned by other carriers. The airline is considering adopting assigned seating as other airlines have, but President Colleen Barrett called its current system of open seating "a plus."

The company has lower costs than almost all its competitors, but Kelly acknowledged that high fuel prices will force it to increase revenue, including by putting more passengers on flights.

Flights to and from Dallas are more full since last month, when Congress relaxed 1979 limits that prevented Southwest from offering long-haul service to and from Love Field.

When Congress eased the restrictions, Southwest offered $99 fares each way for one-stop service between Dallas and many other cities.

American, a unit of AMR Corp., answered with nonstop service to the same cities from nearby Dallas-Fort Worth International Airport at $218 per round trip.

American was actually cheaper in many cases, because Southwest's lowest fares sold out.

That prompted Southwest to answer with the latest sale running through Dec. 1: fares of $39 to $79 each way between Dallas and many other cities. The tickets must be bought 14 days in advance for travel by March 9.

On its Web site, Southwest cautioned, "Seats are limited and may not be available during holidays and very busy travel periods such as the December holiday season." The airline declined to say how many seats would be offered at the sale prices.

American spokesman Tim Wagner declined to say whether his airline would match the fare sale, though such actions are not uncommon.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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