IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v64y2017ipbp113-120.html
   My bibliography  Save this article

Competitive responses of an established airline to the entry of a low-cost carrier into its hub airports

Author

Listed:
  • Chen, Ruowei

Abstract

This paper investigates the competitive responses of China Eastern to the entry of Spring Airlines into its hub airports in Shanghai. The analysis takes into account of the actual and adjacent competition for both LCCs and full-service airlines (FSAs) within an airport-pair framework. The results of the econometric analysis showed that Spring put downward pressure on the average fares of China Eastern and other FSAs. But China Eastern responded more aggressively than other FSAs to Spring's competition on routes from the same and nearby airports. Having said that, the moderate price reduction of 4%–4.9% suggests that China Eastern did not perceive Spring as a serious competitor. Such limited impacts are due to restrictions imposed by the regulator onto Spring Airlines in terms of capacity control and access to major trunk routes.

Suggested Citation

  • Chen, Ruowei, 2017. "Competitive responses of an established airline to the entry of a low-cost carrier into its hub airports," Journal of Air Transport Management, Elsevier, vol. 64(PB), pages 113-120.
    • Handle: RePEc:eee:jaitra:v:64:y:2017:i:pb:p:113-120
    DOI: 10.1016/j.jairtraman.2016.07.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699716302885
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2016.07.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. AfDB AfDB, . "AfDB Group Annual Report 2011 (Portuguese)," Annual Report, African Development Bank, number 393.
    2. AfDB AfDB, . "AfDB Group Annual Report 2011," Annual Report, African Development Bank, number 392.
    3. Brueckner, Jan K. & Lee, Darin & Singer, Ethan S., 2013. "Airline competition and domestic US airfares: A comprehensivereappraisal," Economics of Transportation, Elsevier, vol. 2(1), pages 1-17.
    4. Alderighi, Marco & Cento, Alessandro & Nijkamp, Peter & Rietveld, Piet, 2012. "Competition in the European aviation market: the entry of low-cost airlines," Journal of Transport Geography, Elsevier, vol. 24(C), pages 223-233.
    5. Papatheodorou, Andreas & Lei, Zheng, 2006. "Leisure travel in Europe and airline business models: A study of regional airports in Great Britain," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 47-52.
    6. Njegovan, Nenad, 2006. "Elasticities of demand for leisure air travel: A system modelling approach," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 33-39.
    7. Fu, Xiaowen & Lei, Zheng & Wang, Kun & Yan, Jia, 2015. "Low cost carrier competition and route entry in an emerging but regulated aviation market – The case of China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 3-16.
    8. Steven A. Morrison, 2001. "Actual, Adjacent, and Potential Competition Estimating the Full Effect of Southwest Airlines," Journal of Transport Economics and Policy, University of Bath, vol. 35(2), pages 239-256, May.
    9. AfDB AfDB, . "AfDB Group Annual Report 2011 (Arabic)," Annual Report, African Development Bank, number 394.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oliveira, Bruno F. & Oliveira, Alessandro V.M., 2022. "An empirical analysis of the determinants of network construction for Azul Airlines," Journal of Air Transport Management, Elsevier, vol. 101(C).
    2. Valido, Jorge & Socorro, M. Pilar & Medda, Francesca, 2020. "Airport capacity and entry deterrence: Low cost versus full service airlines," Economics of Transportation, Elsevier, vol. 22(C).
    3. Shengrun Zhang & Yue Hu & Xiaowei Tang & Kurt Fuellhart & Liang Dai & Frank Witlox, 2020. "Modeling the Evolutionary Mechanism of China’s Domestic Air Transport Network," Sustainability, MDPI, vol. 12(16), pages 1-18, August.
    4. Zuidberg, Joost, 2019. "Network geographies and financial performances in low-cost carrier versus network carrier competition: The case of Norwegian versus SAS," Journal of Transport Geography, Elsevier, vol. 79(C), pages 1-1.
    5. B. F. Oliveira & A. V. M Oliveira, 2023. "An empirical analysis of the determinants of network construction for Azul Airlines," Papers 2312.05630, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pittaway, Timothy & Niekerk, Pieter van, 2015. "Horizon- Scanning the Ostrich Industry with Bibliometric Indicators," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(1), pages 1-8, March.
    2. Fiordelisi, Franco & Mare, Davide Salvatore, 2014. "Competition and financial stability in European cooperative banks," Journal of International Money and Finance, Elsevier, vol. 45(C), pages 1-16.
    3. Lieshout, Rogier & Malighetti, Paolo & Redondi, Renato & Burghouwt, Guillaume, 2016. "The competitive landscape of air transport in Europe," Journal of Transport Geography, Elsevier, vol. 50(C), pages 68-82.
    4. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming, 2014. "Market power and its determinants in the Chinese airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 64(C), pages 1-13.
    5. Abbott, Malcolm & Cohen, Bruce, 2016. "The privatization and de-privatization of rail industry assets in Australia and New Zealand," Utilities Policy, Elsevier, vol. 41(C), pages 48-56.
    6. Onono, Joshua Orungo & Alarcon, Pablo & Karani, Maurice & Muinde, Patrick & Akoko, James Miser & Maud, Carron & Fevre, Eric M. & Häsler, Barbara & Rushton, Jonathan, 2018. "Identification of production challenges and benefits using value chain mapping of egg food systems in Nairobi, Kenya," Agricultural Systems, Elsevier, vol. 159(C), pages 1-8.
    7. Stefania Veltri & Giovanni Bronzetti, 2015. "A Critical Analysis of the Intellectual Capital Measuring, Managing, and Reporting Practices in the Non-profit Sector: Lessons Learnt from a Case Study," Journal of Business Ethics, Springer, vol. 131(2), pages 305-318, October.
    8. Le Breton, Michel & Thomas, Alban & Zaporozhets, Vera, 2012. "Bargaining in River Basin Committees: Rules Versus Discretion," LERNA Working Papers 12.12.369, LERNA, University of Toulouse.
    9. Vázquez-Rowe, Ian & Reyna, Janet L. & García-Torres, Samy & Kahhat, Ramzy, 2015. "Is climate change-centrism an optimal policy making strategy to set national electricity mixes?," Applied Energy, Elsevier, vol. 159(C), pages 108-116.
    10. Luca Papi & Andrea F Presbitero & Alberto Zazzaro, 2015. "IMF Lending and Banking Crises," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(3), pages 644-691, November.
    11. Griffith, Andrew P. & Haque, Mohua & Epplin, Francis M., 2014. "Cost to produce and deliver cellulosic feedstock to a biorefinery: Switchgrass and forage sorghum," Applied Energy, Elsevier, vol. 127(C), pages 44-54.
    12. Aloui, Chaker & Hamida, Hela ben, 2014. "Modelling and forecasting value at risk and expected shortfall for GCC stock markets: Do long memory, structural breaks, asymmetry, and fat-tails matter?," The North American Journal of Economics and Finance, Elsevier, vol. 29(C), pages 349-380.
    13. Jaber, J.O. & Elkarmi, Fawwaz & Alasis, Emil & Kostas, Anagnostopoulos, 2015. "Employment of renewable energy in Jordan: Current status, SWOT and problem analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 490-499.
    14. Lührmann, Melanie & Serra-Garcia, Marta & Winter, Joachim, 2015. "Teaching teenagers in finance: Does it work?," Journal of Banking & Finance, Elsevier, vol. 54(C), pages 160-174.
    15. Koopmans, Carl & Lieshout, Rogier, 2016. "Airline cost changes: To what extent are they passed through to the passenger?," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 1-11.
    16. Humberto Brea-Solis & Sergio Perelman & David Saal, 2017. "Regulatory incentives to water losses reduction: the case of England and Wales," Journal of Productivity Analysis, Springer, vol. 47(3), pages 259-276, June.
    17. Bettini, Humberto F.A.J. & Silveira, José Maria F.J. & Oliveira, Alessandro V.M., 2018. "Estimating strategic responses to the march of a low cost carrier to primary airports," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 109(C), pages 190-204.
    18. Karimo, Tamarauntari M., 2015. "The Impact of Economic Liberalization Policy on Performance of the Nigerian Industrial Sector - L’impatto della politica di liberalizzazione economica sulla performance del settore industriale in Nige," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 68(2), pages 229-257.
    19. Marius Häntsch & Arnd Huchzermeier, 2013. "Identifying, analyzing, and assessing risk in the strategic planning of a production network: the practical view of a German car manufacturer," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 24(2), pages 125-158, July.
    20. Kyophilavong, Phouphet & Phoyduangsy, Saysamone & Pangxang, Yiakhang, 2014. "The Environmental, Economic and Social Condition of the Nam Ngum River Basin," Research Reports 244012, Australian National University, Effective Implementation of Payments for Environmental Services in Lao PDR.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:64:y:2017:i:pb:p:113-120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.