Low cost airline competition fuels big price cuts, survey finds
After years of mergers and acquisitions, 70% of US domestic air travel is operated by the four major carriers, but low-cost airlines still have an influence on air fare pricing, according to a study.
Travel planning website Hopper analyzed fare data on 96 domestic routes when a low cost airline entered the market.
The study showed that when budget carriers such as JetBlue, Spirit, Frontier, Alaska or Southwest launch services on a domestic route, fares can drop as much as 67%.
Hopper said JetBlue had the biggest impact on falling air fares when entering a new market, driving down prices by over 50% on average and as much as 67% on some routes.
A highlighted example was the JetBlue service between Boston and Philadelphia which began in May 2013, and saw prices fall from $356 to $118.
Spirit and Frontier Airlines saw an average 30% drop in airfares when they enter a new market, the study found.
Fares do gradually rise again over time, but rarely to same level as before.
The Hopper analysis spanned six months of air fare data – covering three months before and three months after a low cost carrier started flying a new route.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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