The Breeze effect: Evidence on demand stimulation and fare impacts of an emerging low-cost carrier

Breeze Airways represents a new generation of low-cost carriers that strategically target secondary and underserved markets rather than competing directly with established airlines at congested hubs. This study examines how Breeze’s operations have affected air travel demand and airfares across U.S. airports. with particular attention to whether these effects extend beyond directly served locations. Using quarterly airport-level data and spatial econometric models, including the SARAR and SDM frameworks, we estimate both direct impacts at Breeze-served airports and indirect effects at neighboring facilities under varying distance thresholds. The results indicate that Breeze boosts passenger demand and lowers fares at served airports, with demand spillovers evident at neighboring airports within 40–80 miles. These indirect effects are transmitted through spatial dependence in outcomes, as demand increases at one airport diffuse to others via inter-airport linkages. By contrast, fare reductions remain primarily localized, with significant indirect effects detected only at the 40-mile threshold. Collectively referred to as the ‘Breeze effects,’ these results highlight a dual role of Breeze Airways in stimulating demand regionally while constraining fare competition to proximate markets. The findings suggest the importance for airport managers and policymakers to account for both the geographic scope and the underlying spatial mechanisms of new-entrant carriers when evaluating their impacts on regional aviation systems.