The market price will prevail, but I am certain that $123 is not the market price for 3-week advance purchase off-peak flights within California. It has never been the market price before. Not even close. Market price for such flights is $65 to $79, IMHO. I believe that Southwest will make less money if it holds the current prices through the summer.
Does anyone want to bet that Southwest will not go below $100 for summer fares intra-California?
Well, what is the alternative? The same thing is happening on PHX-SoCal/Las Vegas. We were used to $69 or less each way for many years. Now, the fares are in the $123 range.
I took a trip from PHX-ONT for Easter. Initially, it was $115 or more each way. I booked it and, then, kept checking. It finally came down to $69 each way for a 3-day sale sometime in Feb, but if I hadn't checked every other day I may have missed it.
The fares are high and people seem to be paying them.