2013 Session: AV040

• Is There Still A Southwest Effect?
  Abstract: The US airline industry is going through a period of consolidation through mergers between leading airlines. A number of recent mergers have been approved by the Antitrust Division of the Department of Justice (DOJ) based on the presence of Southwest Airlines in merger-affected markets. In doing so, the DOJ makes a key assumption that Southwest is unresponsive in its pricing strategy to the reduced competition when its competitors merge. Numerous studies have validated the so-called “Southwest Effect”, where potential or actual entry by Southwest Airlines is associated with lower market fares. However, considerably less work has examined Southwest’s post-entry pricing strategies. In this study, we find that Southwest raised fares more in markets affected by the Delta/Northwest and US/America-West mergers, between 2005-2010. However, Southwest’s fares either decreased or rose by less if facing direct or adjacent competition from a low-cost carrier (LCC). Furthermore, Southwest is now merging with AirTran Airways, its biggest LCC competitor and the strongest deterrent to raising its prices in merger-affected markets. This implies that Southwest is no longer a suitable deterrent to post-merger fare hikes, particularly in the absence of other LCCs in those markets.
  Authors: bin Salam, Sakib
  Authors: bin Salam, Sakib
  Year: 2013
  Document Type: Paper
  Subject: Aviation; Economics
  Session: AV040
  Paper Number: 13-0429
• Depeaking Schedules: Beneficial for Airports and Airlines?
  Abstract: Post deregulation, many U.S. airlines created hubs with banked schedules, however, in the past decade these same airlines began to experiment with depeaking their schedules to reduce costs and improve operational performance. To date there has been little research that has investigated revenue shifts associated with depeaked schedules; yet understanding the trade-offs among revenue, costs, and operational performance at a network level is critical before airlines will consider further depeaking and related congestion-management strategies. This paper develops data cleaning and analysis methodologies based on publicly available data that are used to quantify airport-level and network-level revenue changes associated with schedule depeaking. These methodologies are applied to a case study of Delta’s depeaking of Atlanta. Results show that depeaking was associated with Delta’s revenue increasing slower than the rest of the network and the industry as a whole, but could have made a profit if costs were cut to a great enough degree. The Atlanta airport likely benefits from the increase in connection time. The methodologies developed in this paper can be extended to other depeaking cases to provide a comprehensive assessment of revenue shifts and to understand airport and network characteristics that are most conducive to schedule depeaking.
  Authors: Katz, Donald Samuel
  Authors: Katz, Donald Samuel
  Year: 2013
  Document Type: Paper
  Subject: Aviation; Economics
  Session: AV040
  Paper Number: 13-0433
• Is There Still A Southwest Effect?
  Authors: bin Salam, Sakib
  Authors: bin Salam, Sakib
  Year: 2013
  Document Type: Presentation
  Session: AV040
  Paper Number: 13-0429