result has been a number of new carriers which specialize in regional service and no-frills operations.

These carriers typically purchase older aircraft and often operate outside the industry-wide computerized

reservations system. In exchange for these inconveniences, passengers receive low fares relative to the

industry as a whole. This research examines two low fare air carriers, ValuJet and Southwest Airlines.

By investigating these air carriers, we can better understand the economic impacts of price versus

service in the airline industry as a whole, as well as, the impacts on passenger and investor confidence. Until 1978, air transport rates were approved by the government, which meant that price was not a primary

competitive factor. Instead, airlines would compete on service and image. The airline industry was

dominated by giants (American, United, TWA) which offered nationwide and some international service, and

by regional carriers, such as Southwest, which offered short trips between airports not served by the

Deregulation of the airline industry brought about in 1978 introduced a

its markets, but this will affect profitability. The company?s strategy is to make up the difference of

company had done this with more than half of the Boeing 737-200 aircraft that it operated (Brown, 1992,

generation of low fare airlines, with ValuJet entering the market in the early 1990?s. Unfortunately,

a whole was suffering. The following chart identifies key operating statistics for Southwest (seat miles

Some topics in this essay:
Cost ASM707708725, ValuJet February, Southwest ValuJet, United TWA, Cole Pasztor, , Southwest Airlines, American Airlines, Companies Southwest, Orlando Atlanta, airline industry, low fares, passenger miles, seat miles, southwests success, regional carriers, revenue passenger miles, revenue passenger, low fare, southwest seat miles, key operating statistics, levels service, available seat, operating statistics southwest, statistics southwest seat,