“Southwest Effect” – Decisions and Effects of Low Cost Carriers

Abstract

This paper reports the findings of an empirical study of low cost airlines. The investigationcenters upon low cost strategies and organization structure of three airlines in the United States over a four year period. Results show that such strategic combinations are very influential on the entire market, resulting in increased sales for all carriers and a decrease in the average fare sold. Of particular note is the role that structure plays in low cost airlines that enables success as they continue growing and competing in new geographic markets.