- Southwest Airlines
- Southwest Airlines completed its first validation test flight to Honolulu’s Daniel K. Inouye International Airport earlier this month.
- The Dallas-based low-cost carrier is expected to launch flights to Hawaii this year.
- According to a recent analyst note from Morgan Stanley analyst Rajeev Lalwani, Southwest’s entrance into the Hawaiian market could see ticket prices fall by more than 30%.
Earlier this month, Southwest Airlines completed its first validation test flight to Honolulu’s Daniel K. Inouye International Aiport. It’s an important part of the Federal Aviation Administration’s certification process that would allow the world’s largest low-cost airline to begin service to Hawaii.
According to a recent analyst note from Morgan Stanley’s Rajeev Lalwani, Southwest’s entrance into the Hawaiian market could have a drastic effect on air travel within the state and for flights to the continental US.
“What we found is that a likely 10%+ capacity addition on North American routes at introductory fares from a low-cost carrier may lead to fares that are 30%+ lower versus today,” Lalwani said in the note.
Morgan Stanley’s analysis is based on the data that shows the current price for a one-way flight from California to Hawaii is around $200 while Southwest’s rumored promotional fares for similar flights could be priced at $140.
Southwest Airlines has a history of shaking up the market for air travel. So much so that there’s a term for it – The Southwest Effect.
In 2017, researchers at the University of Virginia’s Darden School of Business published a study that found when Southwest Airlines enters a market with nonstop flights, fare prices fall an average of 15%. At the same time, the number of people flying increases by 28% to 30%.