Low Cost Carriers Set to Compete with Each Other
Thursday, January 8th, 2009
There has been much made of the fact that low-cost-carriers like Southwest and JetBlue forcing major airlines to offer competitive prices. When Southwest announced fares for its new service between Minneapolis and Chicago, the newly merged Northwest/Delta giant scrambled to match their prices. Southwest and JetBlue have recently expanded their operations, even as they are cutting flights from current strongholds. This is good news for travelers who want another player to drive down prices on their favorite routes.
But it might get even better. Newer operations like Virgin America are also making a play for customers in the budget travel market. The successful business model used by Frontier Airlines, JetBlue, and especially, Southwest, is drawing new players into the low-cost carrier game.
More airlines competing for the same market means more competition. In air travel, more competition is always a good thing because it leads to lower prices.
Take the example of Virgin America, which recently announced the launch of service between San Francisco and Boston. Boston is a major focus city for JetBlue, one of the largest low cost carrier in the nation. As soon as Virgin’s announcement was made, JetBlue announced that it was reinstating daily flights from Boston to San Francisco beginning next Spring. Though the two services will not overlap in terms of time, they will definitely be fighting for the same customers. It remains to be seen what form the competition takes. Will one airline offer more flights? More perks? Or will they try to differentiate themselves by trying to undercut the prices of each other. Other low-cost-carriers and frequent fliers will surely be watching to see how it unfolds. If the Southwests and Virgin Americas of the country begin their own price wars, flying will get cheaper in a hurry. It will become a game of “how low can you go?”