'Southwest Effect' Keeping Prices Low At RDU International
Posted May 19, 2004 7:04 a.m. EDT
MORRISVILLE, N.C. — The airline industry predicts its busiest summer travel season since Sept. 11, 2001. It may be good dollars and sense to fly in the upcoming months.
Oil prices may be on the rise, but thanks to discount air carriers, ticket prices at
Raleigh-Durham International Airport
are lower than they have been in five years.
"We've seen fares reduced 50 or 60 percent in the last two years due to Southwest Airlines being in the marketplace," travel agent Tony Maupin said.
Experts call it the "Southwest Effect."
"It's absolutely a Southwest Effect. It's shown airport after airport. When Southwest moves in, prices come down," said John Kasarda, a University of North Carolina airline industry expert.
Kasarda says discount carriers, like Southwest and Air Tran, fly 25 percent of all passengers. He says that will grow to 40 percent in the next 10 years.
For example, in July, Southwest will charge $76 for a roundtrip from RDU to Philadelphia, which is a USAirways hub. To compete, USAirways dropped its price for the same trip to $66.
Discount carriers undercut the big airlines by keeping down their costs.
Southwest was able to control its oil costs by buying barrel futures at a cheaper price last year. As a result, summer vacation flights could be cheaper than driving.
Travel experts do not know how low airfares will drop, but they say the competition is tough on the big carriers and may force some out of business.
Maupin says Southwest could be a major carrier at RDU in the next 10 years.