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No Southwest Effect for Travel to the United States

No Southwest Effect for Travel to the United States


DALLAS, Aug. 23, 2016 /PRNewswire-HISPANIC PR WIRE/ — FareCompare.com has released a second set of findings based on a comprehensive analysis of the Southwest Effect in new international routes. The study reveals that while consumers traveling to the U.S. did experience the Southwest Effect initially, those average lowest fares have since increased, returning to the levels they were prior to Southwest’s foray into those markets.

“Our latest study shows that Southwest Effect did not stick for travelers flying from the Caribbean, Mexico and Central America to the United States,” said Rick Seaney, CEO and co-founder of FareCompare. “Travelers there saw some initial benefit from increased competition, but fares to the U.S. from these markets have steadily increased in the first half of 2016 and will likely continue to do so in the near future.”

This conclusion contrasts with the first wave of analysis on the Southwest Effect conducted by the FareCompare team, released in April 2016. That study reported fares from the U.S. to international destinations now served by Southwest dropping 25%. In ensuing months, FareCompare data shows that percentage remained consistent.

“The news remains good for U.S. travelers looking for deals on getaways to places like Jamaica, Belize, Costa Rica and Mexico,” Seaney said.

The new report on the Southwest Effect is available at www.farecompare.com/southwesteffect.

The Methodology:

FareCompare analyzes more than 24 billion itineraries daily to find the lowest available prices on existing flights.  For this project, the team analyzed data from the first quarter of 2015 through the second quarter of 2016 from the following origin cities: Belize City, Cancun, Liberia (Costa Rica), Mexico City, Montego Bay (Jamaica), Puerto Vallarta, San Jose del Cabo (Mexico) and San Jose (Costa Rica).

When that analysis was completed, flights were then priced 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. Delta was not included, nor was Southwest which only releases prices on its Web site.

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.

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 Findings:

During the first three months of 2015 the average lowest price across markets in the Caribbean, Mexico and Central America on the aforementioned carriers was $605. In the second quarter of 2015 average lowest prices across these markets decreased $50 to $555 as the impact of Spirit Airlines service across these markets was felt. JetBlue also expanded service from Liberia, Montego Bay and San Jose while Aeromexico added service from Mexico City to multiple U.S. markets.

In the third quarter of 2015, average lowest prices continued to decline to $533. Major U.S. carriers American, US Airways (before its merger with American) and United along with smaller airlines and low cost carriers all lowered prices. Spirit and Frontier were the trendsetters with average lowest prices for this quarter of $449 and $454, respectively – undercutting the across-the-board average of $533 by approximately 16%.

In the last three months of 2015, average lowest prices rose to $572, likely reflecting holiday demand. While average lowest prices for JetBlue stalled at $459, Spirit and Frontier decreased to $427 and $341, respectively.

While the average lowest price dropped slightly from the last quarter of 2015 to the first quarter of 2016 to $564, it jumped back up to $603 in the second quarter of 2016, approaching the $605 price point of the first quarter of 2015. During this quarter, Frontier retrenched to Cancun origins only, while American prices rose to $552, the highest seen for this period of analysis. Alaska has the highest average lowest fare at a whopping $1,176, while Spirit and JetBlue hold the low positions at $444 and $479, respectively.

“The analysis over this 18-month period could actually make the case for The Spirit, Frontier or JetBlue Effect,” Seaney added. “Regardless, this research cements the importance of competition for consumers regardless of the origin destination.”

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 this data to determine how shoppers can get the best deals and will provide updates on the findings in the near future.

About FareCompare

Headquartered in Dallas, FareCompare makes shopping for airfare easy and simple by comparing currently available fares from a wide variety of sources through one simple search.  The company’s multiple products allow customers across the world to keep track of their favorite destinations and specific travel dates, plus find great low price deals that are not publicized through its best-in-class deal detection algorithms. FareCompare.com  is the trusted source of 6 million global users every month.

Media Contact: Joel Frey, [email protected] (972) 588-1432 or (214) 695-1987

No Southwest Effect for Travel to the United States