Since Southwest Airlines entered the Denver market last Jan. 3, fares on flights into and out of Denver International Airport have dropped, passenger levels have risen, and the airport has continued to grow.
So has pressure on Denver-based Frontier Airlines and Denver’s largest carrier, United Airlines, as they step up to compete.
Dallas-based Southwest now has 32 daily departures from Denver to 10 U.S. cities, most on routes already served by United and Frontier.
As Southwest’s first anniversary here approaches, DIA aviation manager Turner West is ready to credit the “Southwest effect” for those changes.
“The Southwest effect, we think, has happened,” West said.
Southwest seems to “stimulate activity (with Frontier, United and other competitors) above and beyond their own flights,” West said.
A review of the Denver- Phoenix route shows some of the market changes resulting after Southwest’s entrance.
In the second quarter of 2005, an average of 1,952 passengers flew the route per day and paid an average one-way fare of $151, according to U.S. Bureau of Transportation statistics. The largest carrier on the route was US Airways, with an average fare of $155. The lowest-fare carrier was Frontier, with an average fare of $152 – not much difference.
A year later, an average of 3,019 passengers flew the route per day and paid an average one-way fare of $96 – a 54.7 percent increase in traffic and a 36.4 percent drop in fares.
The largest carrier in the first six months of 2006 was United, with an average one- way fare of $98. The lowest- fare carrier was Southwest, with an average one-way fare of $87 and a 26 percent market share on the route.
The changes in the Denver- Phoenix market show that not only are more passengers flying the route, but with another carrier coming in with lower fares, other airlines have pushed down their prices.
Having a range of solid players in a marketplace is healthy, “and it has proven to be healthy for DIA,” said Bruce Strand, chairman of aviation consulting firm Team SAI. Whether Southwest will grow as large in Denver as it has in focus cities such as Las Vegas, Phoenix and Chicago remains to be seen, he said.
Southwest’s growth in Denver has not been as rapid as in other markets, such as Philadelphia, where the airline grew to 46 daily nonstop flights to 17 cities in its first year.
It is now the third-largest carrier in Denver but still holds a relatively small portion of the total market here – about 4 percent, compared with United’s 54 percent and Frontier’s 19 percent.
That small market share also limits Southwest’s impact. Though fares on certain routes that Southwest flies have been lowered, the average fare for Denver as a whole increased slightly to $178 in the second quarter of 2006 from $176 a year earlier. That is a smaller increase than in many other markets of the United States as airlines try to boost fares to improve their financial health.
And DIA expects as much as 10 percent growth in passenger traffic, for a total of nearly 48 million passengers using the airport in 2006.
Southwest uses four gates on DIA’s Concourse C, and the airport recently announced plans to build at least eight more gates on the concourse. Southwest can operate as many as 10 departures per gate, so it could grow to 40 departures with its existing gates.
Southwest has indicated that it plans to continue to grow, which has airport managers hopeful.
“They’re telling us they’re here for the long haul,” West said.
Staff writer Kelly Yamanouchi can be reached at 303-954-1488 or kyamanouchi @denverpost.com.
