Southwest Airlines Co., the largest U.S. discounter, announced yesterday that it reached an agreement with Canada's WestJet Airlines Ltd. to form an alliance by late 2009, granting the carriers access to routes outside their home markets.

Southwest, which only operates flights in the lower 48 states, would be able to book customers on WestJet flights to Hawaii, Mexico and the Caribbean and for ski trips in Canada through Calgary or Vancouver. The agreement also puts WestJet’s goal of developing in the U.S. one-step forward.

"This gives WestJet exactly what they need in terms of growing their trans-border flights,'' said Chris Murray, an analyst at CIBC World Markets in Toronto, who rates WestJet market outperform, as quoted by Bloomberg.com. "The deal would make sense for Southwest to build its service into Canada, too,'' Murray added.

The airlines are not yet ready to announce routes, schedules or fares, not until late next year at least, Dallas-based Southwest said. Certain details of the deal must receive approval from the U.S. and Canadian governments, the airlines said.

Travelers will be able to get seats on WestJet flights through Southwest's Web site before the code-share deal becomes effective. The code-sharing agreement will enable the two low-cost carriers to sell seats on each other's planes, gaining access to new customers and new markets with little extra cost.

In addition to Canada, and Mexico, Hawaii and the Caribbean in the next two years, Southwest aims to expand into Asia and Europe, too, as told by Southwest's Chief Executive Gary Kelly to the “Tribune” in an interview last month.

Like Southwest, WestJet handles a fleet of all Boeing 737-series planes and is still profitable in spite of the outbreak of record-high fuel prices. WestJet already owns 75 planes and has plans of adding 46 more aircrafts by 2013. Southwest had 527 Boeing 737s in its fleet as of May.