WeatherPilot
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Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:03 am

In the past whenever Southwest started service in a new city the result was an increase in traffic numbers and ticket prices dropping across the board among all airlines, AKA the 'Southwest Effect'. Do you think this still holds true today?
 
BREECH
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:18 am

Also known as "Emirates effect"? :-)
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
MalevTU134
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:20 am

BREECH wrote:
Also known as "Emirates effect"? :-)

Or Ryanair effect? After all, Southwest was where Michael O'Leary learnt many of his tricks...
 
Jshank83
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:44 am

WeatherPilot wrote:
In the past whenever Southwest started service in a new city the result was an increase in traffic numbers and ticket prices dropping across the board among all airlines, AKA the 'Southwest Effect'. Do you think this still holds true today?


It has an effect but I don't think it has any more effect than if any other airline started a new route.
 
BREECH
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:48 am

MalevTU134 wrote:
BREECH wrote:
Also known as "Emirates effect"? :-)

Or Ryanair effect? After all, Southwest was where Michael O'Leary learnt many of his tricks...

If Ryanair was 0.0001% as good as Southwest, Michael O'Leary, would be AT LEAST 10 positions down from the first place in the Top 2 most hated people in the world.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
MalevTU134
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:02 am

BREECH wrote:
MalevTU134 wrote:
BREECH wrote:
Also known as "Emirates effect"? :-)

Or Ryanair effect? After all, Southwest was where Michael O'Leary learnt many of his tricks...

If Ryanair was 0.0001% as good as Southwest, Michael O'Leary, would be AT LEAST 10 positions down from the first place in the Top 2 most hated people in the world.

With no intention to hijack the thread, let me just suggest that the passengers of Europe's biggest airline by passenger numbers disagree with you....or they would have voted with their wallets and feet.
 
RDUDDJI
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:13 am

WeatherPilot wrote:
In the past whenever Southwest started service in a new city the result was an increase in traffic numbers and ticket prices dropping across the board among all airlines, AKA the 'Southwest Effect'. Do you think this still holds true today?


I'd say that ended round about the time of the 2008 housing/market crash/recession. Since then, with the exception of eliminating another LCC (FL), and perhaps adding a few Int'l routes, their SW effect hasn't been the way it was 15-20 years ago.
Sometimes we don't realize the good times when we're in them
 
BREECH
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:18 am

MalevTU134 wrote:
With no intention to hijack the thread, let me just suggest that the passengers of Europe's biggest airline by passenger numbers disagree with you....or they would have voted with their wallets and feet.

Very true. All I'm saying is, don't compare that disgusting airtrash to Southwest. Or any American LCC, for that matter.
No friendship, love or respect unite people as much as shared hatred.
Sergey Dovlatov
 
Busyboy2
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:19 am

Yep. Sure thing. Southwest Airlines is the fourth largest airline in the world and the second most profitable. I'd say they're doing a pretty stellar job.
 
pdt2f
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:19 am

I’d say the effect is mostly on individual routes nowadays, particularly when WN begins service to a legacy hub. Here at BNA some of the cheapest fares for WN are to MSP and CLT. They announced service to ATL with $69 one way fares and DL has already matched that price, down from maybe $300-500 one way beforehand. I’d say the effect overall is less now because there are so few medium-to-large airports in the US without WN service.
“The sky peoclaims God’s glory - the vault of heaven, the Hand of Him who made it.”

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MIflyer12
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:23 am

There was a peer-reviewed study in 2013 by two researchers at MIT.

https://dspace.mit.edu/bitstream/handle ... 013-07.pdf

Here's what USA Today had to say about it:

'You might want to start calling it the "JetBlue effect."

A study released Thursday has found that Southwest's fabled ability to lower fares by its mere presence in a market has diminished over the past six years, weakening the argument that the carrier can play a key role in keeping prices in check despite a wave of mergers sweeping the airline industry.

JetBlue, meanwhile, and ultra-low-cost carriers such as Allegiant and Spirit have shown a greater impact on lowering the average price of a ticket where they fly.'

https://www.usatoday.com/story/travel/f ... e/2662343/
 
MalevTU134
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:44 am

BREECH wrote:
MalevTU134 wrote:
With no intention to hijack the thread, let me just suggest that the passengers of Europe's biggest airline by passenger numbers disagree with you....or they would have voted with their wallets and feet.

Very true. All I'm saying is, don't compare that disgusting airtrash to Southwest. Or any American LCC, for that matter.

Well, the "disgusting airtrash" takes you from A to B, safely, on time (most of the time) and with no frills included. Just like Southwest. Where the comparison ends is where (as stated a couple of posts downthread from your post), BNA-ATL, a one-hour flight, is seen as a bargain at $69 on WN, whereas Ryanair often has fares at €5 including taxes, on 2 or 3-hour flights. So in terms of lowering fares (which is the topic of this thread), I think it is fair to compare WN and FR, and to conclude that FR wins hands down in this category.
 
LovePrunesAnet
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:47 am

southwest pricing not usually any cheaper on routes I fly. part of the "effect" was people would stop driving a route and hop on SW. They more long routes where nobody was driving anyway, and combined with prices often the same prices as the big 3, it's really not an effect anymore. Certain cases yes, like the BNA-ATL case mentioned above. But it's just price matchhing now, not like nobody was serving that as a route before.
 
DfwRevolution
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 4:27 am

The "Southwest Effect" has always been "Applied Supply & Demand." Once upon a time in the post-deregulation apocalypse, some eggheads sincerely found it insightful that customers responded to lower prices and increased route offerings. Crazy, I know.
I have a three post per topic limit. You're welcome to have the last word.
 
USAOZ
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 5:57 am

The other Southwest effect - where pax will drive up to 2 hours to save a few dollars, is definitely still working.

BNE & OOL(low cost airport) are 90 mins apart, as long as don't drive in peak hour. A large % of OOL mid-long haul pax live in Brisbane.
 
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neomax
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 9:42 am

No, but WN succeeds because people think it does.
 
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TWA772LR
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 9:48 am

It boils down to what I call Corporate Psychology, which Southwest has mastered the art of by keeping the employees happy. They got the good Kool Aid. As anyone that went to business school would tell you, keeping your employees happy will save the company from a lot of problems.
When wasn't America great?


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Lpbri
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 10:59 am

I don't think Southwest really has a cost advantage anymore. It labor costs are on par with its big three competitors. It's homespun corporate culture is long gone. It's just another legacy carrier now.
 
midway7
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 11:49 am

As a business traveler, I have always felt the penalty free itinerary changes are a big differentiation. This is really helpful and has saved me a lot of $ over the years. Free bags are good too, but most of us on short trips tend to not check one anyway. SW also has a lot of nonstop city pairs that others do not offer. I recently flew PDX - STL and it was a pleasure to not have to go through O'Hare or Dallas to do this.
 
klm617
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 12:54 pm

No for the most part they are on par with service and price just as the legacies. There is really no advantage in flying Southwest vs the other network carriers in the USA. It's all about profits now rather than being better than your competitor at what you do because in reality there is very little competition in the markets outside of maybe the top ten metro areas in the United States.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
ncflyer
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 1:25 pm

Southwest is hub and spoke airline for the most part. Granted they have more smaller hubs than the US3, but they are still hubs. WN willingness to start a new route to compete with buses and drivers is long, long gone.

I do think there strategy had to change after 9/11. For a number of years security was so inconvenient that it became relatively speaking more convenient to drive on longer trips.
 
cledaybuck
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 1:50 pm

DfwRevolution wrote:
The "Southwest Effect" has always been "Applied Supply & Demand." Once upon a time in the post-deregulation apocalypse, some eggheads sincerely found it insightful that customers responded to lower prices and increased route offerings. Crazy, I know.
Exactly. The effect most definitely still exists. Southwest may not be able to do it to the extent they once did due to more market saturation and lower cost carriers though.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:05 pm

The Spirit effect exists. As in their February 2018 investor relations presentation for the 4 quarters before and 4 quarters after entry:

LAS-OAK: 650 to 1,048
CHI-MCO: 737 to 951
FLL-SJO: 191 to 346
LAX-CHI: 1347 to 1777
DFW-DTW: 407 to 535
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evank516
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:44 pm

I think for the most part, the Southwest Effect is gone, or at least not what it used to be. However, I think the start of BNA-ATL might revive it briefly.
 
Austin787
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 2:55 pm

I think the Southwest Effect is still in play. It's the reason Southwest and the Big 3 fares are similar on most routes. The Big 3 typically charges higher fares on routes that Southwest doesn't fly.
 
solution
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:25 pm

klm617 wrote:
No for the most part they are on par with service and price just as the legacies. There is really no advantage in flying Southwest vs the other network carriers in the USA. It's all about profits now rather than being better than your competitor at what you do because in reality there is very little competition in the markets outside of maybe the top ten metro areas in the United States.


This surely depends on routes because I can think of several from my city that are significantly cheaper on WN and more importantly have no change fee.
 
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OA940
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:44 pm

BREECH wrote:
MalevTU134 wrote:
BREECH wrote:
Also known as "Emirates effect"? :-)

Or Ryanair effect? After all, Southwest was where Michael O'Leary learnt many of his tricks...

If Ryanair was 0.0001% as good as Southwest, Michael O'Leary, would be AT LEAST 10 positions down from the first place in the Top 2 most hated people in the world.

OK, so only entitled asses hate Ryanair. I mean, it's an amazing airline, because it allows you to fly for less than the cost of a T-shirt. So if there are people dumb enough to expect first-class service there, then they should just all go to a deserted island and let us civilized human beings exist here. :D

But yeah, on topic, the WN effect I think is the same as the effect any airline has when it enters a market already occupied by others.
Last edited by OA940 on Wed Feb 21, 2018 3:45 pm, edited 1 time in total.
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ShinyAndChrome
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 3:44 pm

If by "Southwest Effect" you mean the phenomenon of new entrants in general lowering prices in an established market, then that has always been and always will be there. As for WN specifically, the larger you grow, by definition there will be fewer areas left for you to disrupt in the future. Something like WN's future Hawaii expansion could be an illustrative example of the phenomenon, but that would be more due to the fact that WN is a new entrant rather than anything inherent to WN.
 
frmrCapCadet
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 4:09 pm

Why people like WN:
Their 'Web" model frequently comes to the rescue when one leg is delayed, AND, their computer tells them which passenger is affected by the delay. They call out that passenger and give them the re-routing. Unlike United, plane landed on time in Denver, but we were in the 'back of the bus', and could not get off in time to get the next leg to Rapid City. Employees were surly and unhelpful.

A good chance of getting a window or aisle seat on any flight. Decent pitch. Nice wine for the price. Free peanuts - and an extra couple packets saved me from having to stop and eat on the long drive home. O yes - did I say decent pitch.

The WN effect has not been followed by the legacies - who for Y class once promulgated p*ss elegant amenities and OK pitch, but now offer very little to the occasional Y flyer. We are a bother to them. WN likes them.
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ahj2000
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 6:18 pm

Honestly...no.
At least not here in CLT. When they took over AirTran’s routes how ever many years ago, many locals thought that they would bring revolutionary pricing to Charlotte and finally knock it down from being one of the most expensive O/D airports to something more affordable. In reality, ATL got canceled, and prices didn’t go anywhere. I have yet to find Southwest cheaper than AA save once, but the schedule (stopover at Midway vs nonstop) wasn’t worth the $45ish difference.
So no, from my own anecdotal experience, there is no nSouthwest effect
-Andrés Juánez
 
ucdtim17
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 6:23 pm

ahj2000 wrote:
Honestly...no.
At least not here in CLT. When they took over AirTran’s routes how ever many years ago, many locals thought that they would bring revolutionary pricing to Charlotte and finally knock it down from being one of the most expensive O/D airports to something more affordable. In reality, ATL got canceled, and prices didn’t go anywhere. I have yet to find Southwest cheaper than AA save once, but the schedule (stopover at Midway vs nonstop) wasn’t worth the $45ish difference.
So no, from my own anecdotal experience, there is no nSouthwest effect


Covered today in the WSJ https://www.wsj.com/articles/why-an-ame ... 1519225740
 
TYSflyer
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 6:46 pm

I think it does still exist we just don't see it because they aren't really launching new markets as some alluded to above. GSP (maybe their last all new market) launched I believe in 2011 with 8 daily flights. GSP served around 1.3-1.4 million people prior and is now about 2.1 million even with WN down to just 3 daily flights. Some of this is just growth of the region but I distinctly remember absurd percentage growth numbers there shortly after they launched service. It will be interesting to see if they open another smaller market, such as FAT, what happens to their passenger numbers.
 
jplatts
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 6:55 pm

While the "Southwest Effect" isn't always true in the DAL market, the "Southwest Effect" did exist to some extent in the DAL market when Southwest underwent its post-Wright Amendment expansion at DAL between October 2014 and August 2015 since fares did drop on some of the routes out of both DAL and DFW subsequent to the repeal of the Wright Amendment.

There are times where it is cheaper to fly out of DFW on AA, DL, or UA on regular economy class fares than it is to fly out of DAL on WN.
 
Flighty
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 7:08 pm

midway7 wrote:
As a business traveler, I have always felt the penalty free itinerary changes are a big differentiation. This is really helpful and has saved me a lot of $ over the years. Free bags are good too, but most of us on short trips tend to not check one anyway. SW also has a lot of nonstop city pairs that others do not offer. I recently flew PDX - STL and it was a pleasure to not have to go through O'Hare or Dallas to do this.


Just want to say this was an unusually insightful and well written comment. Not too many people bring up the change fee aspect.
 
Jshank83
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 7:37 pm

Flighty wrote:
midway7 wrote:
As a business traveler, I have always felt the penalty free itinerary changes are a big differentiation. This is really helpful and has saved me a lot of $ over the years. Free bags are good too, but most of us on short trips tend to not check one anyway. SW also has a lot of nonstop city pairs that others do not offer. I recently flew PDX - STL and it was a pleasure to not have to go through O'Hare or Dallas to do this.


Just want to say this was an unusually insightful and well written comment. Not too many people bring up the change fee aspect.


Agreed. I save a fair amount of money a year because of this. It also is nice not to worry about when you book the flight because if the price goes down you can just rebook and get credit.
 
Yossarian22
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 8:08 pm

I would say yes.

I grew up in Cincinnati and went to grad school in Chicago. While I was in Chicago I did not have a car, and the bus and Amtrak were not partiucarly useful means for getting home.

I was in Chicago from 2009-2011, and a round trip flight was generally $300-400 with the only exceptions being, last minute United sales, on Friday night flights that were not selling well due to a lack of business traffic, and a Sunday return, that AA and DL would sometimes match. Basically, UA, DL, and AA did not really compete with eachother. It was often cheaper to fly from Chicago to LAX than Chicago to CVG.

Now with WN in the market, when I was able to fly from ORD to CVG on UA for $70, and back from CVG to MDW on WN for $48. This summer, I have a flight booked from MDW to CVG for $60. I am guessing that WN is trying to stimulate the market now that they’ve entered CVG, my flight from CVG to MDW was mostly empty, and I had the entire first row to myself, only people traveling in groups had to share a row, it was that empty. I am guessing that in a year or two these dirt cheap fares will go away. But, I find that Southwest tends to charge a more “honest” fare than the Big 3, not to mention they don’t charge for bags (which is why I am flying them this summer, as I will be coming home from China 4 days before hand, and will likely have checked baggage) and they don’t charge change fees, which is really nice to know. For years in CVG, on the regional routes, even those with competition, the legacies basically charged an arm and leg. WN on the Chicago route, has changed things for the better.
 
USAOZ
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 9:31 pm

flew Southwest 2 weeks back LAXDEN for USD$27. Could have got a frequent flyer ticket on AA for pile of points + fees + USD$25 for bag.

Southwest are a much better airline than AA, so think that frequent flyer programmes are dying & playing into Southwests hands.

Also flew back to LAX on ff points. AA customer relations said they would tag bags onto another AA flight ex LAX, but at airport wouldn't, so had to collect bags at LAX & recheckin. Should have flown WN back to LAX. Anyone want a heap of expensive ff pts that am willing to throw away ? (650,000)
 
B747forever
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 9:41 pm

USAOZ wrote:
flew Southwest 2 weeks back LAXDEN for USD$27. Could have got a frequent flyer ticket on AA for pile of points + fees + USD$25 for bag.

Southwest are a much better airline than AA, so think that frequent flyer programmes are dying & playing into Southwests hands.

Also flew back to LAX on ff points. AA customer relations said they would tag bags onto another AA flight ex LAX, but at airport wouldn't, so had to collect bags at LAX & recheckin. Should have flown WN back to LAX. Anyone want a heap of expensive ff pts that am willing to throw away ? (650,000)


Similarly, a couple of weeka ago they had a sale for intra CA fligts for about $27 one way. That fare just about covers 1 bag for all other airlines!

BTW, if you insist I am willing to accept some of your miles ;)
Work Hard, Fly Right
 
USAOZ
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Re: Do you think the 'Southwest Effect' still exists?

Wed Feb 21, 2018 9:58 pm

B747forever wrote:
USAOZ wrote:
flew Southwest 2 weeks back LAXDEN for USD$27. Could have got a frequent flyer ticket on AA for pile of points + fees + USD$25 for bag.

Southwest are a much better airline than AA, so think that frequent flyer programmes are dying & playing into Southwests hands.

Also flew back to LAX on ff points. AA customer relations said they would tag bags onto another AA flight ex LAX, but at airport wouldn't, so had to collect bags at LAX & recheckin. Should have flown WN back to LAX. Anyone want a heap of expensive ff pts that am willing to throw away ? (650,000)


Similarly, a couple of weeka ago they had a sale for intra CA fligts for about $27 one way. That fare just about covers 1 bag for all other airlines!

BTW, if you insist I am willing to accept some of your miles ;)

bit off the topic, but it does points out why instead of trying to collect & use ff pts/miles, you should look at the WN fare which includes up to 3 bags.

BTW

Have qf points not miles. So many people I talk to, get sucked into earning QF pts, often paying more to get them, only to find, when they want to use them on say SYD/LAX/SYD they need 100,000 + have to pay AUD$600-$700 in taxes & fuel surcharges, when at same time they can buy a ticket for AUD$750.

Paying more for points - the cash economy in Australia is booming & the govt can't measure it, cos the cash rarely gets banked. You can often get 10-25% off the going rate from small businesses by paying with cash, but many use credit cards, pay the merchant fee of 1-3% just to earn some points & they some airline contracted check in person, says oh, you're travelling on a free ticket, which couldn't be further than the truth.

I find, the best use of QF ff pts is for last minute OZ domestic fares, eg. a day or 2 out when have to go somewhere unplanned.
 
acentauri
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 12:41 am

When I see threads like this, I remember US Airways CEO David Siegel's famous statement when Southwest first entered PHL in 2004: "Southwest is coming to kill us."
 
ahj2000
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 1:39 am

ucdtim17 wrote:
ahj2000 wrote:
Honestly...no.
At least not here in CLT. When they took over AirTran’s routes how ever many years ago, many locals thought that they would bring revolutionary pricing to Charlotte and finally knock it down from being one of the most expensive O/D airports to something more affordable. In reality, ATL got canceled, and prices didn’t go anywhere. I have yet to find Southwest cheaper than AA save once, but the schedule (stopover at Midway vs nonstop) wasn’t worth the $45ish difference.
So no, from my own anecdotal experience, there is no nSouthwest effect


Covered today in the WSJ https://www.wsj.com/articles/why-an-ame ... 1519225740

NEat story. Hidden in there Is a quote saying that Southwest intends to grow at CLT.
-Andrés Juánez
 
ahj2000
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 1:39 am

ucdtim17 wrote:
ahj2000 wrote:
Honestly...no.
At least not here in CLT. When they took over AirTran’s routes how ever many years ago, many locals thought that they would bring revolutionary pricing to Charlotte and finally knock it down from being one of the most expensive O/D airports to something more affordable. In reality, ATL got canceled, and prices didn’t go anywhere. I have yet to find Southwest cheaper than AA save once, but the schedule (stopover at Midway vs nonstop) wasn’t worth the $45ish difference.
So no, from my own anecdotal experience, there is no nSouthwest effect


Covered today in the WSJ https://www.wsj.com/articles/why-an-ame ... 1519225740

NEat story. Hidden in there Is a quote saying that Southwest intends to grow at CLT.
-Andrés Juánez
 
dc10lover
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 3:26 am

It's funny. The "Southwest Effect" has pretty much been forgotten by people.
Why endure the nightmare and congestion of LAX when BUR, LGB, ONT & SNA is so much easier to fly in and out of. Same with OAK & SJC when it comes to SFO.
 
Buffalomatt1027
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 3:40 am

I think the "Southwest effect" depends on the airport. Like my home airport of BNIA / Buffalo.... Legacy carriers wont touch southwest routes.

Frontier and Jetblue share some of the same popular Florida routes and create some competition.
 
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AirAfreak
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 4:29 am

I think 2018 is all about the “WOW-factor.” Transatlantic instead of domestic.

But to some degree, I think Southwest does have some effect these days; unlikely as effective in terms of cost due to the increased presence of the Frontiers and the Spirits of the world. Just my two.
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ScottB
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 4:49 am

WeatherPilot wrote:
In the past whenever Southwest started service in a new city the result was an increase in traffic numbers and ticket prices dropping across the board among all airlines, AKA the 'Southwest Effect'. Do you think this still holds true today?


It absolutely still exists; to see it, one only need look at the most recent airport they added: CVG. In Q2 of 2016, UA's AVERAGE one-way fare between CVG and ORD was $259 and the market average fare was $267, one-way. Today, UA offers REFUNDABLE one-way fares of $171 between ORD and CVG to fly tomorrow. Want to fly to LEX (60 miles farther) instead? $304 for a one-way non-refundable ticket and $504 if you need a flexible ticket. Oh, and don't forget that three airlines "competed" and served CVG-ORD non-stop before WN added CVG-MDW.

How about CVG-BWI? In Q2 of 2016, DL's average fare was $242 each way. Now, DL offers a next-day (but non-refundable, and Basic Economy) price of $170 each way.

ahj2000 wrote:
I have yet to find Southwest cheaper than AA save once, but the schedule (stopover at Midway vs nonstop) wasn’t worth the $45ish difference.
So no, from my own anecdotal experience, there is no nSouthwest effect


Then you don't understand what the "Southwest effect" is. The point is not that WN is always cheaper; rather, their competitors are ultimately forced to lower their own prices lest they lose a large chunk of their business to WN. So while you may find that AA matches prices or charges fares modestly above what WN charges, those AA fares are lower than what they'd be without Southwest in the market.

Look at your home airport: Want to fly to BWI next week? AA will sell you a Mon-Thu non-stop round-trip for $340. Want to fly to PHL on the same days? The lowest round-trip fare on the non-stop flights is $784 (although you can go for $459 if you're willing to connect at RDU in both directions).

MIflyer12 wrote:
There was a peer-reviewed study in 2013 by two researchers at MIT.

https://dspace.mit.edu/bitstream/handle ... 013-07.pdf


(1) I don't see any indication that paper was peer-reviewed.
(2) Swelbar is a dummy (not all people at MIT are smart). He once argued that the partial repeal of the Wright Amendment back in 2006 demonstrated Southwest was abusing its monopoly power because the average fare at DAL (specifically, the average ticket price paid by all passengers at DAL, not average route-by-route fare) increased year-over-year after WN was permitted to sell connecting itineraries beyond the Wright perimeter. Why was that dumb? Because passengers were flying longer itineraries than before, so one would expect the average fare paid to go up. I'd expect to pay more for DAL-ABQ-LAX or DAL-STL-MDW than just DAL-ABQ or DAL-STL.

Now, it is absolutely true that other carriers can and do have a similar impact in the markets they enter -- i.e. a JetBlue effect or Spirit effect or Allegiant effect. The key difference is that the relative lack of connectivity offered by these entrants leads to a more limited impact; i.e. B6 entering MSP-BOS doesn't have the same power to lower fares in as many markets as WN did when they entered with MSP-MDW.
 
cvgComair
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 2:18 pm

ScottB wrote:
WeatherPilot wrote:
In the past whenever Southwest started service in a new city the result was an increase in traffic numbers and ticket prices dropping across the board among all airlines, AKA the 'Southwest Effect'. Do you think this still holds true today?

It absolutely still exists; to see it, one only need look at the most recent airport they added: CVG. In Q2 of 2016, UA's AVERAGE one-way fare between CVG and ORD was $259 and the market average fare was $267, one-way. Today, UA offers REFUNDABLE one-way fares of $171 between ORD and CVG to fly tomorrow. Want to fly to LEX (60 miles farther) instead? $304 for a one-way non-refundable ticket and $504 if you need a flexible ticket. Oh, and don't forget that three airlines "competed" and served CVG-ORD non-stop before WN added CVG-MDW.

How about CVG-BWI? In Q2 of 2016, DL's average fare was $242 each way. Now, DL offers a next-day (but non-refundable, and Basic Economy) price of $170 each way.

Certainly fares dropped CVG, but I do wonder how much of an "effect" WN had at CVG across the board. WN helped lower fares on CVG-BWI/MDW, but that is going to happen whenever a new carrier enters a route. Fares have been dropping on those routes for quite some time before WN came (UA/DL increasing CVG-ORD capacity and G4 entering CVG-BWI). DL lowered average fares for all routes from a high of +$700 in the mid-2000's down to ~$550 by 2012 without any competition. G4 and F9 subsequently pushed this down to ~$350 before WN entered and fares are about $300 now.

As for growth, every carrier at CVG experienced double digit passenger growth for 2017. The majority of this growth was non-WN and is a product of a market like CVG being suppressed by high fares. They helped lower fares a little bit, but I don't think it was a dramatic transformation that I would normally associate with the "Southwest effect". Granted, this is probably more of an anomaly in the WN network since G4/F9 are so big at CVG and the airport still is a US3 mini-hub/glorified focus city for DL. There is a lot more "dominance" by existing carriers compared to markets of similar size, DL basically serves the role that WN plays at airports like CLE/CMH/PIT/IND/etc. Long term, it will be interesting to see if WN or DL is #1 in Cincy. Given DL's recent moves, it seems like they have no plans to give up their position, should be interesting...
 
Yossarian22
Posts: 158
Joined: Wed Feb 21, 2018 7:25 am

Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 2:30 pm

cvgComair wrote:
ScottB wrote:
WeatherPilot wrote:
In the past whenever Southwest started service in a new city the result was an increase in traffic numbers and ticket prices dropping across the board among all airlines, AKA the 'Southwest Effect'. Do you think this still holds true today?

It absolutely still exists; to see it, one only need look at the most recent airport they added: CVG. In Q2 of 2016, UA's AVERAGE one-way fare between CVG and ORD was $259 and the market average fare was $267, one-way. Today, UA offers REFUNDABLE one-way fares of $171 between ORD and CVG to fly tomorrow. Want to fly to LEX (60 miles farther) instead? $304 for a one-way non-refundable ticket and $504 if you need a flexible ticket. Oh, and don't forget that three airlines "competed" and served CVG-ORD non-stop before WN added CVG-MDW.

How about CVG-BWI? In Q2 of 2016, DL's average fare was $242 each way. Now, DL offers a next-day (but non-refundable, and Basic Economy) price of $170 each way.

Certainly fares dropped CVG, but I do wonder how much of an "effect" WN had at CVG across the board. WN helped lower fares on CVG-BWI/MDW, but that is going to happen whenever a new carrier enters a route. Fares have been dropping on those routes for quite some time before WN came (UA/DL increasing CVG-ORD capacity and G4 entering CVG-BWI). DL lowered average fares for all routes from a high of +$700 in the mid-2000's down to ~$550 by 2012 without any competition. G4 and F9 subsequently pushed this down to ~$350 before WN entered and fares are about $300 now.

As for growth, every carrier at CVG experienced double digit passenger growth for 2017. The majority of this growth was non-WN and is a product of a market like CVG being suppressed by high fares. They helped lower fares a little bit, but I don't think it was a dramatic transformation that I would normally associate with the "Southwest effect". Granted, this is probably more of an anomaly in the WN network since G4/F9 are so big at CVG and the airport still is a US3 mini-hub/glorified focus city for DL. There is a lot more "dominance" by existing carriers compared to markets of similar size, DL basically serves the role that WN plays at airports like CLE/CMH/PIT/IND/etc. Long term, it will be interesting to see if WN or DL is #1 in Cincy. Given DL's recent moves, it seems like they have no plans to give up their position, should be interesting...


On CVG-CHI, the question is where will fares settle in 12-18 months. I have flown CVG-CHI many times and never saw fares this low, outside of United last minute seat fillers on Friday night flights.

I doubt fares hold at 50-70 one way. But, it probably will be a more honest fare, than when it was only legacies.
 
lat41
Posts: 602
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 3:50 pm

Southwest made a much bigger splash when it entered the medium perimeter cities and traffic took off for them and existing carriers at the same time but that was 10 or so years ago. Now with the big markets they enter, often they become just another entrant fighting for a piece of the pie. Back at those medium perimeter cities that helped WN build their system they are now just an aloof legacy.
 
citationjet
Posts: 2492
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Re: Do you think the 'Southwest Effect' still exists?

Thu Feb 22, 2018 4:08 pm

klm617 wrote:
No for the most part they are on par with service and price just as the legacies. There is really no advantage in flying Southwest vs the other network carriers in the USA.

One disadvantage is that SW does not have agreements with any other airline. If your SW flight cancels, they will only put you on another SW flight, they cannot put you on another airline (ie Rule 240). If they can't get you to your destination (to make a cruise for example), they will refund your remaining ticket, and you are forced to purchase another ticket on another airline at the last minute.
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