The Southwest Effect is the increase in airline

Airline

An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...

 travel originating from a community after service to and from that community is inaugurated by Southwest Airlines

Southwest Airlines

Southwest Airlines Co. is an American low-cost airline based in Dallas, Texas. Southwest is the largest airline in the United States, based upon domestic passengers carried,...

 or another airline that improves service or lowers cost.

Lower fares increase demand

The term was coined in 1993 by the U.S. Department of Transportation to describe the considerable boost in air travel that invariably resulted from Southwest's entry into new markets, or by another airline's similar activity (Ritter) . Southwest offered dramatically lower air fares than established airline

Airline

An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...

s that usually enjoyed a near-monopoly

Monopoly

A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 in the communities.

Competing airlines match Southwest fares

Airlines competing with Southwest Airlines resisted Southwest entering a new market, due in part by the necessity to lower fares in that market (and reduce profitability) to remain competitive.

Sales rise for all airlines in the market

The established airlines also feared losing passengers to Southwest Airlines. Instead, it was found that the entry of Southwest and the corresponding drop in air fares stimulated business in the communities and increased demand for air transportation.