New airlines, such as Breeze Airways, are tapping into underserved markets to generate new travel demand. By offering nonstop routes and lower fares, these airlines are providing travelers with more options, especially in smaller markets. However, in order to succeed in the long-term, these airlines must not only offer low prices but also provide reliable service to ensure customer loyalty. This is the focus of our weekly column, Cruising Altitude, which explores various aspects of air travel. If you have any suggestions for future topics, please fill out the form or email us at the address provided at the bottom of this page.

Traveling by air is a necessity for many people, whether for work or personal reasons. However, there are also times when travelers are not aware of their desire to take a trip until a new airline offers them an opportunity. In a competitive industry, new airlines are targeting underserved markets to create new demand for flights that may have previously been taken by other modes of transportation or not taken at all.

According to David Neeleman, CEO and founder of Breeze Airways, the majority of their traffic is generated through stimulation of demand. He explains, “We’re essentially creating demand where it didn’t exist before. ” This means that when an airline starts a new route, a significant part of its success relies on attracting customers who will continue to fly with them.

Often, this means drawing passengers away from other airlines that are already operating similar routes. However, in some cases, new airline routes can also initiate entirely new travel patterns that didn’t exist before. This business model, which focuses on inducing new demand for flights, has become increasingly common among ultra-low-cost carriers. Neeleman believes that this is a way for new airlines to grow without directly competing with well-established carriers who are protective of their existing customer base. He states, “We’re not really a threat to other airlines.

The Southwest Effect, a term coined in 1993 by the U. S. Department of Transportation, refers to the impact of low-cost carriers like Southwest Airlines on the airline industry. This report highlighted how new airlines with low operating costs and affordable ticket prices were driving demand for flights and forcing established carriers to lower their prices. William J. McGee, senior fellow for aviation and travel at the American Economic Liberties Project, explains, “Until the early ’90s, it was believed that airline traffic was primarily about stealing market share from competitors. However, the smaller and low-fare airlines have the ability to create new routes and generate new demand.

However, as Southwest Airlines has evolved and become more like other airlines, new upstarts in the industry, such as Breeze, are taking the pioneering model to the next level. McGee notes, “I would argue that Southwest itself doesn’t have the same Southwest effect that it once did.

For travelers in markets where new airlines enter, there is an initial period of promotional fares and low prices.