MELISSA BLOCK, host:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
It's called the Southwest effect. That's the travel industry term for the sharp decline in airfares when Southwest Airlines enters a new market. In Philadelphia, where Southwest started service just over a year ago, fares on some routes have dropped by as much as 80 percent. NPR's Jack Speer paid a visit to the Philadelphia Airport to see how things have changed, and he has this report.
JACK SPEER reporting:
Southwest has been able to stay profitable by picking the cities it flies into and out of very carefully. And one of the airline's most successful recent launches has been in Philadelphia.
(Soundbite of airport PA system)
Unidentified Woman: You are at...
SPEER: It's 10 AM on a weekday morning and things are still bustling at the Southwest ticket counter. Patricia Bowen from Lansdale, a nearby suburb, is heading to Orlando.
Ms. PATRICIA BOWEN (Passenger): This is the first time I've ever flown Southwest, so...
SPEER: What caused you to decide to try today?
Ms. BOWEN: Because the prices and my two daughters have flown them and really thought it was a good airlines.
SPEER: How much was a round-trip fare to Orlando?
Ms. BOWEN: $118.
SPEER: That's pretty good.
Ms. BOWEN: Pretty good, yes.
SPEER: Other airlines have had to match Southwest's fares, and the cheaper airfares have led to a sharp increase in passengers. Charles Isdell, the airport's director of aviation, says overall traffic at the airport rose 15 percent last year. That means several million more passengers a year, and Isdell says the savings are just enormous.
Mr. CHARLES ISDELL (Director of Aviation, Philadelphia International Airport): The fare savings, we calculate, on 28 1/2 million passengers saving on the order of $80 on average per trip--they're saving over $2 billion a year the way we count it, and that's money to be used for other spending, whether it's on food and beverage, magazines and newspapers, Disney World, you name it.
Mr. MIKE SWERKA (Manager, Jack Duggan's Pub): My name is Mike Swerka(ph) of Jack Duggan's Pub.
SPEER: And you're the manager here?
Mr. SWERKA: I'm the manager. Business has increased substantially. We have another bar past security, and both businesses have picked up a lot since Southwest come here.
SPEER: Do you have any rough idea how much you've seen your business go up in the last year or so?
Mr. SWERKA: Roughly? I'd probably say about at least 30 percent.
SPEER: The Philadelphia Airport has been drawing business away from other airports in the region, with some people driving from as far away as New York City. And it's hard to measure, but experts say there are a lot of trips that wouldn't have happened at all without the lower fares. Austin Goolsby is a professor at the University of Chicago who has written about the Southwest effect.
Professor AUSTIN GOOLSBY (University of Chicago): One of the main lessons that Southwest has taught everyone is if you cut the fares, you generate lots of business. And they came in and said, `If we offer a low fare, we're just going to count on generating lots and lots of passenger business,' and they've done it. They've done it everywhere they go.
SPEER: But while fares have fallen and business is up at the airport, all those additional people are putting a strain on airport resources. In 2002, a new 3,000-space parking garage opened at the airport. Frank Ragazino(ph), director of airport operations for the Philadelphia Parking Authority, says it was supposed to meet parking needs for years to come.
Mr. FRANK RAGAZINO (Director of Airport Operations, Philadelphia Parking Authority): When we opened that garage, we were supposed to have enough parking till the year 2010. And, in fact, just this year, for the first time ever, we've experienced days where we were out of all 17,000 spaces. We had no room at the airport facility whatsoever.
SPEER: The Airport Authority plans a bond issue for improvements at the airport and is also looking at possibly expanding existing runways. Southwest officials, meanwhile, say they aren't surprised by their success in Philadelphia. Southwest recently expanded into Pittsburgh, and is rumored to be planning another launch this year with speculation focusing on Charlotte, North Carolina. Jack Speer, NPR News, Washington.
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