Back in May, Southwest Airlines announced that it would put its brand-new fleet of Boeing 737 Max 8 aircraft to good use by offering flights to Hawaii. That isn't just good news for fans of the budget carrier, because Travel + Leisure reports that where Southwest goes price-wise, other airlines follow.
The Los Angeles Times did some deep digging and found that since 1971, which is when Southwest started flying the friendly skies, competitors feel compelled to lower their prices to compete for customers. Using data from University of Virginia's Darden School of Business, researchers saw what travel-savvy customers already knew: the "Southwest Effect" is a boon for budget travelers.
"Virtually every market entered by Southwest experienced a significant reduction in average market fares," the study’s authors, Alan R. Beckenstein and Brian M. Campbell, wrote. "The Southwest Effect is alive and well [today]. We find no evidence that the Southwest Effect has been eroded or overtaken in significance or magnitude by other airlines."
Looking at figures from 2012-2015, Campbell and Beckenstein noticed that competitors lowered their prices 10-15% as soon as Southwest started servicing a new destination. It's a unique phenomenon, too, since the pair didn't notice the same thing when other low-priced carriers expanded their reach. (Sorry, JetBlue, but it looks like Southwest has the clout in this department.)
If the price matching holds, that means that flights to Hawaii could drop to around $300 round-trip when Southwest starts to service the islands. There's no word on when that'll happen exactly, but you can be sure that as soon as it does, it'll be a major event for piña colada-loving jet-setters everywhere.
Until then, Southwest's planned expansion to Puerto Vallarta, with flights starting in March 2018, and Costa Rica, the Dominican Republic, and other Mexican destinations on the schedule, it looks like plenty of spots are about to experience the Southwest Effect. All the better for cash-strapped vacationers.
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