Business Report: The so-called Southwest effect

Business Report: The so-called Southwest effect

HONOLULU (HawaiiNewsNow) - This is getting mentioned more often in stories about Southwest launching to Hawaii. But it’s not a law, or a guaranteed thing, So what is the Southwest Effect? Two years ago, MBA students at the University of Virginia studied the effects of Southwest routes. They found that when Southwest enters a new market, average fares fall 15%. And the number of people flying increases 28% to 30%. The implication is: Southwest generates new business for itself AND its competitors. But none of that necessarily applies to Hawaii. On the mainland, Southwest often enters underserved markets with pent-up demand. Hawaii is NOT an underserved market, not even from the four cities Southwest will serve first. It MIGHT grow business by shifting vacationers to Hawaii who now burn miles flying to Cancun or other tourist markets Southwest already serves.

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