Southwest Airlines and the Impact of Low - Cost Carriers On Airline Ticket Prices

Southwest Airlines is the indisputable leader of the Low-Cost Airline industry in the United States. A product of deregulation, the expansion of its unique business model has been responsible for the substantial real price declines in consumer airfares since the 1980s. However, recent fuel price declines have had a significant impact on the industry and their impact on the low-cost sector today, as the driver of price competition, is important to understand. This paper includes a multivariate linear regression of 2015 data to examine the impact of various US LCCs on average airport, airport-route, and city-route fares, and compares the impacts to the results of ticket data from 2012 and 2007, with a particular interest in the effect of Southwest. It concludes that despite industry concentration, the association of Southwest with lower average route, airport, and market prices had actually strengthened from 2012 to 2015.