The impact of Southwest Airlines on Commercial Aviation Research Paper

The impact of Southwest Airlines on Commercial Aviation - Research Paper Example 311). Along the way, it refined its low price strategy by cutting down on food and beverage offerings, mandating open seating which increases capacity, flying only one type of plane, locking in low fuel prices when the fuel prices spiked in 2008, and favoring secondary markets such as Chicago Midway over congested markets, such as Chicago O’Hare. These strategies helped Southwest cut prices, and the result of Southwest’s ability to slash prices has been nothing short of astounding on the entire airline industry, resulting in fare cuts across the board, and substantially increasing airport traffic for the airports that serve Southwest in relation to airports that do not. The result of the impact of Southwest Airlines on the airline industry has been so significant that it was given a name – the â€Å"Southwest Effect†. Different studies have done different analyses on the Southwest Effect. Morrison (2001) performed a study on the aggregate effect of Southwest on Southwest’s competition, then compared the aggregate estimate with fare reductions that were the result of deregulation, as a way to quantify Southwest’s effect on the success of deregulation (Morrison, 2001, p. 241). Morrison stated that the airfares on a given route are influenced by another airline in three ways. First, is when the other airline serve a given route; second, when the other airline serves an adjacent route that is seen by consumers to be a reasonable alternative to the first route; and third, the other airline affects fares if the existing airlines on a route lower their fares in order to keep out potential competitors (Morrison, 2001, p. 241). Morrison quantified Southwest’s impact on each of these categories, stating that there was a potential for Southwest to impact 94% of domestic passenger miles (Morrison, 2001, p. 243). His unit of measurement for this impact was an equation