After a period, discounters either raise prices or go out of business, he said. Typically, the pattern that you see with low-cost entrants, they will come in with a very low price, one size fits all, and that generally evolves to a structure with a variety of fare types. Darryl Jenkins, director of the Aviation Institute at George Washington University in Washington, D.C., cautioned that the government's average fare doesn't represent what anyone actually pays. It's simply a blend of high business fares and low leisure fares that require advance purchase and other restrictions. And the data do not by themselves demonstrate predatory pricing on Northwest's part, Jenkins said.
Airfares go up and down every day for complex reasons.
Fares reflect seasonal demands, the rise and fall of fuel prices, the impact of higher labor costs and many other factors. Despite these complexities, experts say it's clear that the presence of a discount carrier tends to bring down prices on a given route. The difference is that Northwest and its alliance partner, Continental Airlines , control 100 percent of the capacity on the Cleveland route, while Northwest faces competition from discounter Southwest Airlines on the Kansas City route. The Detroit-Baltimore route shows the impact of a discounter dramatically. Prices dropped by more than half after Pro Air started flying to Baltimore on July 4, 1997.