New airline routes lead to lower prices

When LCCs launch routes, average fares drop – for a while

When low-cost airlines launch new routes, average fares drop – but only temporarily, a new study finds. In the US, more than 70% of domestic traffic is now operated by four major carriers, due to recent large-scale mergers. But low-cost carriers still have influence when it comes to ticket prices.

When LCCs like Southwest, Spirit, JetBlue, Frontier and Alaska start to fly on an existing domestic route, the average price from all carriers falls by as much as 67%. That’s good for passengers, but fares soon rise again.

The study by travel planning site Hopper looked at the effects of low-cost carriers launching around 150 new routes. The average fare for all airlines dropped suddenly. Then, within several months, they increased again – but usually not as high as they had been.

LA Times

[pictured: American Airlines; courtesy oneworld]