사우스웨스트 효과(Southwest Effect): 市場競爭과 價格分散

Abstract

The small upstart carriers like Southwest Airlines have proven formidable competitors for major airlines and emergence of the carriers is being considered as an important economic phenomenon itself in the U.S. domestic airline industry. This paper investigates the competitive effect of Southwest Airlines' presence and quantifies its economic impacts on market fares and the fare distributions of major airlines. The paper also explicitly compares the key factors affecting Southwest and major airlines' pricing strategies. The regression results find that Southwest conducts very simple pricing strategy relative to major airlines and considers only actual flight distance and the number of competitors as meaningful fare determinants. The study also finds that Southwest presence has a significant economic effect on market fares, and more importantly, larger effect on major airlines' high-valued, 80th percentile customer fares than low-valued, 20th percentile customer fares. Southwest drives more price cuts at short-haul city-pair markets than long-hauls. The result shows a sharp difference from the common perception on Southwest as a low-cost carrier in that it effects more the high-valued customer fares and that the price dispersion with an increased market competition is decreased. The empirical evidence suggests that the high quality service with network efficiency is a key factor explaining Southwest's successful market performance.