In 1976, CAB Chairman John Robson pushed to “experiment” with price competition, and Continental was allowed to lower its intra-Texas fares to match and even undercut Southwest’s. Incidentally, Southwest introduced a two-tiered pricing structure… $13 each way fares matching Continental and $26 business fares which included a free fifth of alcohol. I vaguely recall Southwest becoming the largest liquor distributor in the state of Texas in 1977.
The rebuttal is worth reading. Posner's commentary is generally quite good, but he gets ripped hard by Mr. Leff. It sounds like Posner was commenting on an industry for which he doesn't have his normal depth of background (Leff calls him out for overtly false historical assertions left and right). Becker's commentary on the same topic differs a good bit from Posner's as well.