International Southwest Effect Part II

Southwest plane


On April 2016, the team documented the Southwest Effect – the drop in airline ticket prices when the Texas-based carrier enters a new market – on fares from the U.S. to newly-served international beach destinations in the Caribbean, Mexico and Central America that began in 2014 and continued in 2016.  In that study, FareCompare reported a consistent drop in fares that U.S. consumers have become accustomed to when Southwest enters new markets, concluding that Southwest’s expansion into these destinations spurred an across-the-board increase in competition. Overall, this has been a win for ever price-conscious U.S. fliers.

As airfare analyst and FareCompare CEO Rick Seaney has previously stated: “The Southwest Effect is about competition and what happens when more airlines go head-to-head on the same routes.”

FareCompare is now taking its initial Southwest Effect data a step further to answer this question:


Have International Travelers Flying from the Caribbean, Mexico and Central America to U.S. Destinations Enjoyed Cheaper Flights?

No major savings for travelers flying to the the United States from these new destinations, unlike what FareCompare saw for those travelers who originated in the U.S.

The average lowest prices have fluctuated and are close to the same levels they were when Southwest entered these international beach destinations.


The Methodology

Southwest Effect II: Airlines and Cities

FareCompare analyzed data from the following origin cities:

  • Belize City, Cancun, Liberia (Costa Rica), Mexico City, Montego Bay, Puerto Vallarta, San Jose del Cabo (Mexico) and San Jose (Costa Rica)

Then priced flights from those origins to these destination cities:

  • Atlanta, Boston, Dallas-Ft. Worth, Denver, Houston, New York and Washington, D.C.

Fares were compared for these airlines:

  • Aeromar, Aeromexico, Alaska, Frontier, Interjet, JetBlue, Spirit, Sun Country, Tropic Air and Virgin America.

Note: Delta was not included, nor was Southwest which only releases prices on its proprietary website.

Other factors included in the collected data:

  • Non-stops and one-stop flights
  • Round-trip fares only
  • Length of stay: Between 4 and 14 days
  • Point of Sale: Outside the U.S.

Advance purchase: Between 14 and 34 days

The first analysis compared 72,847 airfare searches the first quarter
2015 with 249,911 airfare searches in the first quarter of 2016 to determine if baseline price changes had occurred. The second analysis compared a total of 1,411,990 airfare searches from January 2015 through June 2016, using the same filters applied to the first analysis.


The Bottom Line

The Southwest Effect did not stick in reciprocal markets.

Southwest Effect II: Airfares Rise, Fall, Rise

2015 Q1 – Jan. to March

At the outset of Southwest’s international service to the Caribbean, Mexico and Central America, the average low price across markets and all carriers (excluding Delta and Southwest) was $605.

2015 Q2 – April to June

Average prices across these markets decreased $50 to $555 as Spirit Airlines began providing service across most markets. JetBlue also expanded service from Liberia, Montego Bay and San Jose while Aeromexico expanded service from Mexico City to multiple U.S. markets.

2015 Q3 – July to September

Average prices continued to decline to $533 as American, US Airways (before its merger with American) and United align pricing downward under combined seasonality and market pressure. Smaller airlines and low cost carriers chipped in with lower prices too, led by Spirit and Frontier at an average low price for this quarter of $449/454 – undercutting the across-the-board average of $533 by around 16%. Alaska and Virgin America continue to hold up the high end of the price band in the over-$700 range.

2015 Q4 – October to December

Prices rise a bit to $572, likely reflecting holiday demand for these origins. While average low prices for JetBlue stall at $459, Spirit and Frontier bring their own prices down to $427 and $341 respectively. However, United, American and Aeromexico fares appear to be much more broadly available. This is the last month US Airways fares are independent from American.

2016 Q1 – January to March

Average low prices drop only slightly to $564 compared to the prior quarter, but they are cheaper by $41 (7%) than the same quarter in 2015. Frontier continues to hold down the lowest-price position at an average low fare of $374, again followed by Spirit at $432.

2016 Q2 – April to June

Average low prices across carriers return to $603, approaching the $605 price point of the first quarter of 2015. During this quarter, Frontier appears to retrench to Cancun origins only, while American prices rise to $552, the highest seen for this period of analysis. Alaska has the highest average-low fare at a whopping $1,176, while Spirit and JetBlue hold the low positions at $444 and $479 respectively.

The Authors

Dr. James C. Stone, PhD is the lead author of this study. Dr. Stone is FareCompare’s Lead Data Scientist.

Anne McDermott is FareCompare’s Editor, responsible for the company’s news and editorial content.

The research project was led by Dr. James C. Stone, Ph.D., Lead Data Scientist at FareCompare, supported by Anne McDermott, Editor and the entire analytics and communications team at FareCompare. The team continues to analyze the data, looking at customer benefits by ticket point of sale, effect on flights that include one-stop and price changes in other routes to Latin America by low-cost carriers, including Spirit Airlines and Mexico’s Interjet.



Dr. Stone, PhD, Big Data expert.


Anne, journalist, editor, news

Anne McDermott
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