Travel Trends: The effect of Southwest Airlines’ cheap fares on competitor fares

The last time you wanted to book a trip somewhere in the U.S., what airline did you think of first? If you’re like thousands of U.S. air passengers, you checked to see if Southwest Airlines flew in and out of the city you wanted to visit. Since its inception almost forty years ago in 1971, Southwest has been providing passengers all over the country with low-cost travel options.

Southwest uses several strategies to lower its costs so they can, in turn, can offer cheap fares. Among them:

  1. They mostly fly in and out of secondary markets, which are less costly.
  2. They only use one type of plane, the Boeing 737, which keeps maintenance costs down.
  3. They only fly domestically.
  4. Southwest Airlines is a “low frills” airline, dispensing with extras like meals or in-flight movies.

The formula seems to be working. The average Southwest Airlines ticket can often be a fraction of the price of a ticket on another major airline. Further, many passengers will drive out of their way to a secondary market in order to be able to take a Southwest flight. As a result of this success, other airlines have been pressured to lower their prices in order to compete. The average ticket price in markets with Southwest in them has gone down in the last ten years, while many markets without Southwest have gone up.

Because of Southwest’s policy of serving secondary markets, however, it’s difficult to do a simple analysis of the data to see in which markets the price has gone down, and in which markets it has gone up. Take, for example, Chicago Midway Airport, into which Southwest flies. Southwest does not fly into Chicago O’Hare, but prices there are still likely to be affected, since airlines at O’Hare want to compete for passengers who might otherwise go to Midway and use Southwest.

For a simple analysis, we looked at four cities in which Southwest had started service in the last ten years, and then compared ticket prices ten years later.

Buffalo started Southwest service in 2000. By 2009, Buffalo’s average fare had plunged by 19%. Southwest entered the market in both Dulles and Denver in 2006. From 2006 to 2009, the average ticket price at Dulles went down 1%; in Denver, the average ticket price dropped 13%. In 2007, service to San Francisco started; between 2007 and 2009, the average airfare went down 21%. None of these data account for inflation either.

By contrast, we also looked at the airfares from 2000-2009 in markets that did not have Southwest. Although the gains were modest by some means, in a world where most airfares have gone down in the last ten years, they were still significant. Not only does Savannah, Georgia, not have Southwest, but Southwest does not operate anywhere in the entire state of Georgia. Therefore, it was no surprise to see a 6% increase in fares over the last ten years. Alabama and Tennessee are both under served by Southwest, as well, which is reflected by Memphis increasing by 3% and Huntsville increasing by 9%. Finally, Reagan (Washington DC), which competes with Dulles, went up by 2%.

All in all, it’s cheaper overall to fly now than it was in 2000; but for the markets served by Southwest, it is cheaper still. The advent of Southwest and other low-cost airlines such as Air Tran have lowered costs all over the nation. Many people have reported that flying Southwest is a more pleasant experience in other ways as well; the facts bear this out. Southwest has the lowest customer complaints in the industry (as of 2009).

So what are you waiting for? Grab your sun tan lotion and your swimsuit — your next vacation in the California sun just got a lot cheaper.

Data Sources:

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When idiots collide – one man checks bag with $200k in stamps, another steals them

Do you enjoy a story filled with stupid people? Then you are going to love this one! A Texas stamp collector checked his luggage containing rare stamps – and a regular luggage thief swiped the bag and tried to sell the stamps at local pawn shops.

The thief, Antoine Shaw, is a regular at Midway airport, and he has been charged with luggage theft before. Of course, since airport security is too busy searching people for water bottles and nail clippers, nobody noticed this repeat thief swipe more bags. Antoine hit the jackpot when grabbed a bag on November 18th – it contained $200,000 in rare stamps.

Pawn shops gladly purchased the stamps from him on two visits, but on his third trip, pawn shop staff got suspicious and called the cops. Shaw was arrested, and according to the police report, “only some” of the stamps were recovered.

It doesn’t matter how often you remind people not to check valuables in your luggage – every year someone ignores the advice. Of course, in most cases it involves a missing laptop or camera.%Gallery-76818%

Will Chicago get an airport on the South Side?

In May, I’m flying into Chicago. My friends live in Bolingbrook, a suburb to the south about 35 miles from downtown. According to Map Quest, it will take me 54 minutes to get to their house. I’m thinking, if I’m lucky. Traffic through Chicago can be a nightmare. This summer we drove right by downtown at 1:00 in the morning and traffic was still heavy, so heavy that we missed a toll booth lane and had to send our $1.35, or thereabouts, in the mail.

In his column in the New York Times today, Bob Herbert outlines the plan in the works for a new airport in Chicago to be built on the South Side. There are stumbling blocks to such a plan. Politics for one. What interests me is the number of jobs an airport produces, both during construction and afterward. The number is well into the thousands.

From Herbert’s description airports sound like beehives of activity. As he points out, O’Hare has grown to be so massive that it’s unwieldy at times. Although, according to O’Hare’s Web site, it was voted the Global Traveler Award for Best Airport in North America in 2007. Herbert also points out that Midway’s runways are short which poses another problem.

The airport on the South Side makes sense to me. It would sure make getting to Bolingbrook much easier. Possibly it could help lessen traffic through downtown by people who had to head further north in order to fly out of town.

Budget Travel: Chicago

Summary: Chicago could be a budget traveler’s dream come true. The city is conveniently located in the middle of the country, it is surrounded by several major airports, has decent rail and road links, and has tons of free and affordable things to do.

Getting in: Getting to Chicago is going to be one of the easier parts of your trip. The city is served by almost every airline in the country (except Virgin America), and flights arrive at O’Hare or Midway airports. Adventurous (and creative) fliers can also fly into Rockford or Milwaukee airports, but the ride to the city may add too much to the cost of your trip.

Chicago may not be the massive rail hub it used to be, but Amtrak still offers rail service from many US cities. A round trip from Denver to Chicago costs about $190 and takes 18 hours. A train ride from San Francisco to Chicago takes 53 hours and costs $290 round trip. These fares may be substantially lower than air travel, but you’ll lose a day (or two) just getting there.

Of course, if you are feeling like a challenge, you could go all Clark Griswald on us, and drive.


Getting around – Making your way around Chicago is pretty simple, the downtown area can be reached from O’Hare with the Blue Line CTA trains, and once you get downtown, you’ll be close to a subway or bus stop almost everywhere you go. A great place to start is the site of the Chicago Transit Authority. Fares are $2.25 each, but unlimited ride passes start at just $5.75 a day.

Where to stay : Expedia has 562 hotels listed for the greater Chicagoland area, but like many big US cities, the closer you stay to the “action”, the more you will pay.

For example; one of the cheapest hotels listed for “Chicago” is a $42/night Days Inn, located in Gurnee, IL. You’ll be quite disappointed when you arrive at this hotel and realize it’s a good 40 miles from downtown Chicago.

Downtown hotels will cost you around $90 a night, just don’t expect too much luxury at that price range.

The cheapest way to stay downtown in Chicago is usually through Priceline. Downtown hotels usually go for about $50 when you use the Priceline “name your price” feature.

A great place to check recent winning bids is betterbidding.com. If you don’t feel comfortable with making a bid for a cheap room, then I can only suggest checking the rates on your favorite hotel booking site, because cheap stays is not something Chicago is known for.

What to see: When it comes to things to do in Chicago, the question is not what to do, but how much time you actually have to see the things you are most interested in. A typical downtown Chicago tourist will usually spend their first day strolling up and down Michigan Avenue. Between all the stores are a couple of impressive landmarks.

The Chicago Water Tower was one of just a handful of buildings that survived the great Chicago fire of 1871. The Water Tower is also home to the Chicago visitors center, where you’ll be able to snag some discount coupons for local attractions. Other “must see” attractions on the budget traveler’s list are:

  • Navy Pier – the pier is the most popular tourist destination in the Midwest. This structure extends about 3,000 feet into Lake Michigan and offers everything from a (boring) food court to a massive outdoor Ferris wheel. Navy Pier is also home to an Imax theater, the Chicago Children’s Museum and a large indoor garden. Access to Navy Pier itself is free, and during the winter quite a nice place to hang out. During the summer months you’ll find plenty of outdoor seating as well as weekly outdoor events. The Children’s museum at Navy Pier offers free admission every Thursday evening from 5-8pm, and free kids (<15) admission every first Monday of the month.
  • Field Museum – The Field Museum of Natural History is a must see for anyone wanting to get up close and personal with Sue, the worlds largest and most complete Tyrannosaurus Rex. She’s setup right in the middle of the main hall. Admission to the museum itself is sadly not very budget friendly and starts at $15 per person, up to $29 for their “platinum pass”. There are however 52 days a year when you can get free general admission.
  • Shedd Aquarium – This aquarium is one of the most impressive in the world, at one point it was the largest, and most visited aquarium in the country. A total of over 32,000 different animals are on display, from over 2,000 different species. The aquarium admission is a fairly steep $17.95 for adults, so keep an eye on their discount schedule for 2009.
  • Hancock Center / Sears Tower – Either one of these Chicago skyscrapers is a great place to relax for a bit. You’ll grab the elevator to 1,030 feet (Hancock Center) or 1,353 feet (Sears Tower). Once you are up there, there is no rush to leave, and you’ll be able to spend some time looking down at all the other fun things you can do. Admission is pretty high ($15 for the Hancock and $12.95 for the Sears Tower).
  • Millennium Park – If you are planning to visit the Windy City during the not-so-cold months, then a trip to Millennium Park is a great way to spend some time. The park has evolved into the heart of the downtown cultural area. During the summer, there is always something going on in one of the various pavilions. One of the best ways to get around the park (and the rest of the downtown area), is with a bike rental at the McDonalds cycle center. Rentals start at $8/hour. The cycle center is also where you’ll be able to participate in a guided bike tour of the lakefront.
  • Goose Island Brewery – Thirsty and in need of something to do? Check out the Goose Island Clybourn brew pub and tour. You can get a guided tour of the facility every Sunday at 3pm and 4:30pm. The $5 tour fee includes a tasting of their fantastic Chicago-born ales and lagers.
  • Lincoln Park Zoo – The Lincoln Park Zoo is located just off Lake Shore Drive, and is open 365 days a year. The best part about this zoo is that admission is free. You’ll find lions, polar bears and a fantastic kid-friendly zoo pavilion on the campus, as well as a large bird house. Because of the weather in Chicago, many of the exhibits are indoors.
  • Chicago Water Taxi – The water taxi runs from Michigan Avenue to Chinatown (and back), and rides are just $2 each. The first ride starts at 6:30am (9:45am on weekends) and the last ride is around 6pm. Their $4 “all day” pass is the best way to ride up and down the river and get some fantastic chances for some photos. Due to ice in the river, the service won’t start till March.

You’ll have noticed that most attractions in Chicago are not always very budget friendly. If you plan to visit as many things as you can, you’ll often be better off with a Chicago Citypass. $59 gets you free access to the Shedd Aquarium, Field Museum, Museum of Science and Industry, Adler Planetarium and either the Hancock Center or Sears Tower observatory decks. The admissions usually include at least one premium exhibit and is valid for 9 days from the day of first use.

Places to eat: Chicago natives, look away. My recommendations for places to eat are mostly touristy places, but unlike some other major cities, the tourist eateries in Chicago are by no means a tourist trap.

  • Billy Goat Tavern – This legend of a restaurant has always been famous in Chicago, but it became famous worldwide thanks to a skit on SNL. Remember Cheezborger, no Pepsi, Coke! and no fries, Cheeps? Head to their original location at lower Michigan Avenue for the authentic experience.
  • The Vienna Beef factory store – No visit to Chicago is complete without at least 2 or 3 Chicago-style hot dogs…and where better to eat a dog, than the restaurant attached to the place where they are made? Vienna Beef dogs are the quintessential Chicago food. Order your dog the way it was meant to be – with neon relish, mustard, onions, slices of tomato, a pickle, sport peppers and a light sprinkle of celery salt. Make sure you pay attention to the warning on the wall – ketchup is “illegal” on hot dogs in Chicago for anyone over the age of 12.
  • The Wiener’s Circle – This eatery is a “must visit” in Chicago. Think “Soup Nazi”, but with hot dogs. Avoid going here during the day, it’s much more fun late at night on a weekend. The restaurant is currently closed due to some “minor” health code violations, but do not let that scare you away from going there once it opens again. Remember to order a chocolate milkshake!
  • Pizza – Make sure to grab a slice of authentic Chicago pizza. There are several decent restaurants serving the real thing, my personal favorites would be Lou Malnati’s (order your pizza with buttercrust) or Giordano’s. These restaurants will serve individual deep dish pizza for about $6. Make sure to put aside up to 45 minutes for your pizza to be baked.
  • Heaven on Seven – Authentic Louisiana food in downtown Chicago? You bet. Chef Jimmy Bannos makes a killer gumbo, even better jalapeno cheddar corn muffins and a Cajun ice tea that is so potent, they limit you to one. I’ll admit that the place is not the most budget friendly joint in town, but $12 will get you a cup of gumbo and a huge chicken Po’ Boy sandwich. Trust me on the gumbo though – don’t leave without ordering it. Real fans will be happy to know that will gladly sell you the stuff by the gallon.

Chicago airport food FAIL – and what’s safe to eat

Chicago airports are full of hot meatIf you or your loved ones are traveling for the holidays and those travels take you through either of Chicago’s airports, you need to read this.

If you thought airport food was gross before, you ain’t seen nothin’ yet. At Midway airport in Chicago, an investigator recently found toxic black mold in the ice being served, and there was rat hair in a sandwich at O’Hare.

The big offenders:
Lalo’s – repeatedly stores their meat at unsafe temperatures, and the drinking water may be tainted.
Luigi Stefani’s – where they found the black mold, as well as unsafe sandwiches. Luigi Stefani’s failed health inspections in 2005 and 2006.
Reggio’s Pizza Express – failed three inspections since 2007 for various violations including the coolers not working.
The Doghouse – meat and cheese at unsafe temperatures.
Chili’s – failed four inspections in the last three years and is suspected of giving multiple travelers E. coli.
Manchu Wok – two failures since 2006.
Wolfgang Puck – two cooks with open sores on their hands.

Even Gate Gourmet, who makes the airplane food, has repeatedly failed inspections due to insects, rodents, and unsafe temperatures. There’s a lot of hot meat in Chicago.

Basically? If you have to eat something on the plane or at the airport, choose prepackaged items that could not be made toxic by being stored at an unsafe temperature, and stick to bottled water.

Be careful, because getting sick could ruin your trip.

[via cbs2chicago]