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Some insights into competition between low-cost airlines

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  • Pitfield, D.E.

Abstract

The phenomenon of the wide world growth in low-cost airlines has resulted in a focus on their pricing strategies, on issues of cost recovery and on their impact on the traffic and market shares of legacy carriers or other low-cost carriers when they are in competition, either directly or at adjacent airports. This paper provides a brief overview of the characteristics of these low-cost carriers as well as their history and geography. It goes on to outline ways in which these carriers compete and manage demand, ranging from price competition to advertising; some of these methods directly reflect their special characteristics. Some empirical evidence is presented which indicates a correlation in fare setting behaviour between competitors and insights are offered on cost recovery. The impact of the start-up of low-cost carriers is also analysed, focusing on their impacts on other low-cost carriers. The case of Ryanair competing with easyJet on London-Venice is examined along with Southwest and Frontier on Denver-Las Vegas.

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  • Pitfield, D.E., 2008. "Some insights into competition between low-cost airlines," Research in Transportation Economics, Elsevier, vol. 24(1), pages 5-14.
    • Handle: RePEc:eee:retrec:v:24:y:2008:i:1:p:5-14
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    References listed on IDEAS

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    1. D. E. Pitfield, 2007. "Ryanair's Impact on Airline Market Share from the London Area Airports: A Time Series Analysis," Journal of Transport Economics and Policy, University of Bath, vol. 41(1), pages 75-92, January.
    2. Button, Kenneth & Vega, Henry, 2007. "The Uses of the “Temporal-Fares-Offered Curve” in Air Transportation," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 46(2).
    3. D. E. Pitfield, 2005. "Some Speculations and Empirical Evidence on the Oligopolistic Behaviour of Competing Low-Cost Airlines," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 379-390, September.
    4. Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
    5. Scott Blunk & David Clark & James McGibany, 2006. "Evaluating the long-run impacts of the 9/11 terrorist attacks on US domestic airline travel," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 363-370.
    6. Pitfield, D.E., 2008. "The Southwest effect: A time-series analysis on passengers carried by selected routes and a market share comparison," Journal of Air Transport Management, Elsevier, vol. 14(3), pages 113-122.
    7. Graham, Anne, 2006. "Have the major forces driving leisure airline traffic changed?," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 14-20.
    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.
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    Cited by:

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    2. Chandra Mahapatra, Subas & Bellamkonda, Raja Shekhar, 2023. "Higher expectations of passengers do really sense: Development and validation a multiple scale-FliQual for air transport service quality," Journal of Retailing and Consumer Services, Elsevier, vol. 70(C).
    3. Moreno, Luis & Ramon, Ana & Pedreño, Andrés, 2015. "The Development of Low-cost Airlines and Tourism as a Competitiveness Complementor: Effects, Evolution and Strategies," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 3(4), pages 262-274.
    4. Mumbower, Stacey & Garrow, Laurie A. & Newman, Jeffrey P., 2015. "Investigating airline customers’ premium coach seat purchases and implications for optimal pricing strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 73(C), pages 53-69.
    5. Ruiz-Moreno, Felipe & Mas-Ruiz, Francisco J. & Sancho-Esper, Franco M., 2021. "Strategic groups and product differentiation: Evidence from the Spanish airline market deregulation," Research in Transportation Economics, Elsevier, vol. 90(C).
    6. Bitzan, John & Peoples, James, 2016. "A comparative analysis of cost change for low-cost, full-service, and other carriers in the US airline industry," Research in Transportation Economics, Elsevier, vol. 56(C), pages 25-41.

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