Southwest Air Shakes Up Its Competitors : Airlines: Cheap fares and a blistering expansion are forcing bigger airlines to take notice, a federal study says.

The rapid expansion of low-fare, low-cost Southwest Airlines has made it the “principal driving force behind dramatic, fundamental changes” in the airline industry and a leading carrier in the nation’s largest markets, according to a government report issued Tuesday.

The U.S. Department of Transportation study found that Southwest’s lower fares have forced much larger competitors--notably American, Delta and United--to cut their own prices and reduce or even eliminate service.

The average fare on short-haul routes served by Southwest was about half those on comparable routes without Southwest service, the study found. Southwest’s continued growth will put more pressure on other airlines to lower their operating costs, the report said.

“The big carriers are clearly aware of Southwest’s presence and are clearly reacting to it,” a DOT official said.

Also, several recent start-up carriers--many of which have modeled themselves on Southwest--will help keep air fares lower, the study found.

The government report, whose findings have been echoed by industry analysts and previous private studies, is part of an ongoing look at competitive forces within the airline industry. However, industry observers say it is unusual for the DOT to single out an airline in such a report.

Southwest Chairman Herbert Kelleher was the only executive from a passenger airline named last month to a government commission that will investigate and offer solutions for the money losing airline industry.

Southwest’s impact on the industry has grown tremendously since the DOT first studied airline competition in 1990.

Then, the Dallas-based airline carried 19.8 million paying passengers. Last year, Southwest carried nearly 28 million passengers. Southwest now carries more passengers than any other airline on the nation’s 100 busiest routes.

In California, Southwest overtook United Airlines last year as the largest carrier within the state.

As other airlines have floundered in a 2 1/2-year slump, many have studied Southwest’s lean, efficient operations. For example, American and other large carriers are examining their expensive hub-and-spoke operations, which Southwest has shunned in favor of point-to-point service.

But some industry observers warn that Southwest’s model works best on heavily traveled routes of 500 miles or less. The carrier’s no-frill, one-class service may not sell well on longer domestic and international flights, said George Pearson, vice president of information services at Avitas, a Washington based aviation consulting firm.