Effects of Southwest Airlines' entry and airport dominance

Asahi, Ryota; Murakami, Hideki

doi:10.1016/j.jairtraman.2017.06.029

Cited by 10 publications

(5 citation statements)

References 16 publications

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“…It should be noted that the number of responses collected by the survey distributors varies between 7 and 41. Due to this variation in number of responses collected by each survey distributor, unbalanced panel effects may be present across the survey responses (Choo and Oum, 2013;Chow, 2014;Yokomi et al, 2017;Sarwar et al, 2017a;Sarwar et al, 2017b;Asahi and Murakami, 2017;Fountas et al, 2018b;Fountas et al, 2018c;Fountas et al, 2018d;Fountas et al, 2019). Besides, the effect of the explanatory variables may vary across observations due to the presence of unobserved heterogeneity, i.e., the effect of unobserved characteristics on the respondents' opinions (Hainen et al, 2013;Chu, 2014;Anastasopoulos et al, 2017;Fountas and Anastasopoulos, 2017;Mathew et al, 2017;Brueckner and Abreu, 2017;Song et al, 2018).…”

Section: Methodsmentioning

confidence: 99%

An exploratory empirical analysis of willingness to hire and pay for flying taxis and shared flying car services

Ahmed

Fountas

Eker³

et al. 2021

Journal of Air Transport Management

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Section: Methodsmentioning

confidence: 99%

An exploratory empirical analysis of willingness to hire and pay for flying taxis and shared flying car services

Ahmed

Fountas

Eker³

et al. 2021

Journal of Air Transport Management

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“…As early as 1993, Bennett and Craun concluded that Southwest's operations on the Oakland-Burbank route resulted in a 55% decrease in prices. Later research studies found similar results by studying different routes and different settings, including [3][4][5][6][7][8][9]12] and many others.…”

Section: Related Literaturementioning

confidence: 79%

“…Given the fact that LCCs have been so successful, it is not surprising that they have attracted a lot of attention in the literature. A great deal of research has been conducted to demonstrate LCCs' dramatic downward pressure on airfares, which, in turn, leads to a significant increase in air travel demand and passenger traffic (examples include [2][3][4][5][6][7][8][9] and many others). Nevertheless, with a concurrent fare drop and overall traffic rise, it is unknown whether and to what extent LCCs may affect other carriers' profits on a route.…”

Section: Introductionmentioning

confidence: 99%

Effects of Southwest Airlines on Carrier Profits and Entry Probabilities

Ren

2021

Mathematical Problems in Engineering

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This paper studies the effects of Southwest Airlines, the largest low-cost carrier (LCC) in the U.S., on other carriers’ payoff functions and entry probabilities. A static entry game model is developed and estimated by viewing entry as an indicator of underlying profitability and making use of Nash Equilibrium. Results indicate that Southwest has a remarkable and negative impact on the payoffs of other carriers. This impact is firm-specific, with LCCs being more affected than full-service carriers (FSCs). Comparing the two service types, the results show that Southwest’s nonstop presence apparently imposes more downward pressure on opponents’ profits than its connecting presence. A counterfactual experiment is then conducted. Once Southwest is counterfactually removed, the probability of each carrier entering a market significantly changes. This paper examines Southwest’s impacts from a new perspective and extends literature on entry game estimation.

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“…Many empirical studies have found that this has negative effects on the incumbent airlines' fares and traffic in different markets, e.g. the European market (Alderighi et al, 2012), US market (Asahi and Murakami, 2017;Abda et al, 2012;Daraban and Fournier, 2008), Indian market (Wang et al, 2018) and Brazilian market (Oliveira and Huse, 2009). However, not all research points in this direction.…”

Section: Lca Entry Effects On Local Marketmentioning

confidence: 99%

Effects of introducing low-cost high-speed rail on air-rail competition: Modelling and numerical analysis for Paris-Marseille

et al. 2020

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Given the trend of railway liberalization in Europe and Asia, we explore the effects of introducing low-cost highspeed rail as an answer to the railway reform on air-rail competition. In particular, by proposing a vertically differentiated model, we first derive the optimal pricing policies as well as the corresponding profits and market shares for low-cost high-speed rail (LCR), full-service high-speed rail (FSR) and air transport (Air). We do so for two types of LCR entrants, namely the incumbent owned entrant (to the FSR company) and the independently owned entrants. For both situations, we prove analytically that introducing LCR leads to reduced FSR and Air fares as well as to reduced Air traffic. The fare and traffic reductions increase with the passenger's time value and with the LCR travel time, while they decrease with the Air unit seat cost. Moreover, all LCR effects are stronger for an independently operated LCR. We apply our model to the Paris-Marseille route, based on data collected from publicly available sources. It is found that introducing an independently owned (incumbent owned) LCR on this route leads to 39% (33%) less air traffic, 20% (14%) less FSR traffic and a 37% (29%) increase in total rail traffic. Furthermore, this comes with increases of 2% (8%) in combined railway profit and 6% (5%) in total social welfare. These results support the decision of French policy makers to have LCR and FSR operated by the same company, as it comes with much higher combined railway profits and almost the same welfare increase as independently owned LCR. Further sensitivity analyses suggest that most LCR passengers would otherwise have traveled by FSR or Air, although LCR also attracts new passengers. In addition, offering a low-cost alternative is more effective if passengers value time more highly. Implications in terms of methodology and industry are provided.

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Effects of Southwest Airlines' entry and airport dominance

Cited by 10 publications

References 16 publications

An exploratory empirical analysis of willingness to hire and pay for flying taxis and shared flying car services

An exploratory empirical analysis of willingness to hire and pay for flying taxis and shared flying car services

Effects of Southwest Airlines on Carrier Profits and Entry Probabilities

Effects of introducing low-cost high-speed rail on air-rail competition: Modelling and numerical analysis for Paris-Marseille

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