Last updated: 04:30 PM ET, Wed June 01 2016

Why Are Mid-Size Markets Seeing The Biggest Fare Drops?

Airlines & Airports | Josh Lew | June 01, 2016

Why Are Mid-Size Markets Seeing The Biggest Fare Drops?

PHOTO: The city of Cleveland. Its major airport experienced the biggest drop in average fares between 2013 and 2015. (photo courtesy of Thinkstock)

On average, airfares are dropping this summer. Averages, however, mean little to individual fliers. How cheap will tickets get? It depends on which market you happen to be in and where you need to fly. Often, people in mid-size markets don’t see the same kind of price changes as those in large markets. 

Smaller cities are seeing bigger fare drops

But there is good news for people flying out of smaller cities. According to price data from the last three years, flying out of mid-size markets has become cheaper than flying out of major hubs. Between 2013 and 2015, the biggest change in fares was seen at Cleveland Hopkins International. 

Over this three year period, average fares at Cleveland dropped by more than 20 percent from $453 to $360. Cincinnati (16.4 percent), Memphis (12.4 percent) and Anchorage (10.6 percent) were also high on the list. 

One major hub, Houston Intercontinental, cracked the top five with a 10.9 percent drop in average prices. This is most likely due to its position as a hub for the struggling American oil industry. With oil execs and employees staying home instead of traveling, the airlines at Houston had to lower fares to entice other fliers. 

READ MORE: Is a New Trend Helping Smaller Airports Succeed?

Why is this happening?

The drop of prices in Cleveland offers some insight into what is happening in America’s mid-size markets. A couple of things seem to be going on. 

First of all, over the past several years, full service airlines have decided to drop routes in smaller markets. Many of these routes have been taken over by low cost carriers. The base fares of these budget airlines are cheaper than the fares offered by legacy carriers. Of course, these base fares do not include extra fees that some airlines like to charge. 

Frontier, Southwest and Spirit are all among the most active airlines at Hopkins, so this could be at least part of the reason for the lower fares. Prices have been pushed even lower on routes where multiple low cost carriers are competing with one another.  

READ MORE: Why Are Airlines So Hot for Cleveland?

Leisure destinations are the cheapest

Where people fly from these mid-size markets matters. In Cleveland, fares to leisure destinations have dropped more than fares to places that are popular with business travelers. Ohio fliers have seen a more-than-40-percent drop in fares to Florida destinations. For example, flights to Orlando are down 42 percent and flights to Fort Lauderdale have plummeted by 46 percent since 2013. 

Las Vegas fares are also down by more than 40 percent as low cost carriers compete for a larger share of the market on this lucrative route. 

Meanwhile, fares from Cleveland to business destinations were steadier between 2013 and 2015. Some even rose. Prices for flights between Hopkins and LaGuardia were up by 21 percent and the price of a flight to JFK rose by nine percent. Interestingly, the Cleveland-New York routes are not served by low cost carriers. Having Southwest or Frontier launch a Cleveland-New York route could help lower the fares somewhat. 

So, at least for leisure travelers, it might now actually be an advantage to live in a mid-size market instead of a major hub.   

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