After 18 months of deficit operations, Southwest Airlines stands on the brink of profitability. Selective application of discount fares has contributed to a rapid growth in market share. Then, in February 1973, its major competitor halves all fares on Southwest's principal route. Management must decide how to respond. Exhibits detail Southwest's cost structure plus passenger and flight statistics for Southwest and competitors. May be used with: (9-575-061) Southwest Airlines (B); (9-575-118) Southwest Airlines (C).