The Southwest effect : a time series analysis on passengers carried by selected routes and a market share comparison

Abstract

The Southwest effect has been known for some time in terms of the US airline’s impact on pricing, competition and traffic volumes. But recent estimates of the impact on traffic and market shares do not exist. This desideratum can be addressed by applying Autoregressive Integrated Moving Average (ARIMA) models with Intervention analysis to key domestic air routes in the USA where Southwest has started service. The paper first deals with the choice of routes to be examined and, after a preliminary statistical description of these, applies the ARIMA models. These results are examined for both their statistical qualities and their reasonableness and the impacts are compared to those previously determined in the same way for Ryanair’s routes from London.