Pricing appears rational in Atlanta after Southwest’s market entry

Southwest's highly anticipated entry into the Atlanta market operating under its own brand has not altered advanced fares in the market dramatically even as the carrier pledged that its walk-up business fares would fall 30% below those of dominant carrier Delta Air Lines. In some markets, Southwest and its subsidiary AirTran are charging higher business fares than their larger rival while economy fares charged by the low-fare carriers are only marginally cheaper.

But Southwest appears willing to undercut Delta at the last minute on some fares, as Delta recently attributed a miss in its May unit revenue projections to competitor fare actions during the second half of the month. Delta's unit revenues grew 6% year-over-year during May-2012, a single percentage point miss from the 7% guidance the carrier had previously provided. Many US carriers have warned of weaker year-over-year revenue comparisons in May-2012, due to the major increases recorded in 2011 off a weaker base in the year prior.