A harder landing at Logan

Discount competition means Southwest's effect on fares may be muted here

June 28, 2009|Katie Johnston Chase, Globe Staff

Since Southwest Airlines said in April that it would begin flying from Logan International Airport to Baltimore and Chicago, average fares on those routes have dropped 38 and 20 percent, respectively. Nice discounts, yes, but not as good as they’ve been in the past.

In what has been dubbed the “Southwest effect,’’ the Dallas low-fare carrier historically has cut average ticket prices in half and doubled the number of travelers when it enters a new market. But it’s a different world now: Instead of the smaller, underserved airports it used to target, Southwest is entering major cites, where other discount airlines such as AirTran Airways and JetBlue Airways have already slashed prices. And with fares already low because of the recession, it’s that much more difficult for Southwest to bring prices down further.

“It’s not going to be the cakewalk that Southwest is used to having,’’ said Henry H. Harteveldt, principal airline analyst for Forrester Research Inc.

To be sure, the Southwest effect is in play at Logan, where the airline plans to begin service Aug. 16. After Southwest said it would fly to Baltimore for $49 each way, JetBlue added a $39 route to Baltimore starting in September. Then Southwest dropped its fares to match. AirTran also offers the $39 fare.

Meanwhile, Delta Air Lines exited the Boston-Baltimore route ahead of the new price competition.

“It’s a battle between low-cost carriers,’’ said Anne Banas, executive editor of the Charlestown-based travel website SmarterTravel.com, “which is great for Bostonians.’’

But several factors are keeping Southwest from having the huge impact of years past at Logan.

Logan has no dominant carrier, for one, making it a more competitive market than “hub’’ cities that big airlines establish as a central place through which to route flights, like New York for JetBlue and Minneapolis/St. Paul International Airport for Northwest Airlines. When Southwest said it would start flying from Minneapolis to Chicago in March, for instance, average round-trip fares on that route plummeted about 66 percent.

“I think you’re going to see the market share in Boston stay pretty much the same,’’ said Edward Freni, director of aviation at Logan.

And there may not be many new passengers coming to the market, some analysts say.

“I’m not expecting to see the enormous pop that was associated with the so-called Southwest effect,’’ Forrester’s Harteveldt said.

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