Abstract:
This paper involved the estimation of a series of fare
equations in order to ascertain the effects of actual and
potential competition by Southwest on markets for air
travel. The results indicate that pricing strategies differ
depending on Southwest's presence on a route, which is not
consistent with the theory that airline markets are
contestable. Concentration is not a determinant of airfares
when a general specification is adopted. This indicates
that: other route characteristics need to be taken into
account to evaluate the competitiveness of a route.
