Question

In: Economics

Why would other airlines be “forced” to follow Southwest’s fare decrease?

Why would other airlines be “forced” to follow Southwest’s fare decrease?


Solutions

Expert Solution

The south west's ability to lower fares by presence of market diminishing..

Shows greater impact on lowering the price of a ticket.

Department of Justice and district of columbia filed a law to block the union which would lead to a loss of service and high fares for the travelling public.

South West's entry into a market lead to fares coming down.

South Wests own merger with Air Tran in 2011

While south west continue to have cooling effect on ticket prices..

Its impact is significantly less than what was just a few years ago.

South West had to pass through the cost of fuel to the consumer.

They have been forced to increase its fares like the rest of the industry..

The scale of the south west network relative to Jet blue is significantly bigger.

Airlines have shifted flights to larger Airports and low cost carriers such as south west have raised their prices.

So there is a noticable trend that Airports are consolidating their service around one or two Airports.


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