Southwest Airlines — the deregulation-era carrier that built its reputation on discount fares — says its fare-lowering power is alive and well, and it’s now pointing to one of the USA’s top business airports as proof.
Since Southwest began ramping up its presence at Washington’s Reagan National Airport (DCA) in 2014, passenger traffic is up 38% and fares are down 12% on routes the airline flies nonstop. That’s above the industry’s nationwide average and is greater than the 31% passenger increase and 8% fare drop seen across all airline routes at DCA, Southwest says, citing publicly available federal data from the U.S. Department of Transportation.
Southwest says those trends are evidence of the “Southwest Effect” – a phenomenon in which fares fall and traffic rises once Southwest enters a new market.
The term may sound like something made up by the airline’s public relations team, but it actually derives from a 1993 report by the U.S. Department of Transportation that looked at the effect expanding low-cost carriers were having on airfares.