Some Speculations and Empirical Evidence on the Oligopolistic Behaviour of Competing Low-Cost Airlines
AbstractThis paper reviews the theory of cost recovery and oligopoly with a view to advancing some judgements as to the way in which European low-cost airlines manage yield, depending upon the market morphology that applies. Routes with more than one operator in direct (at the same airport) competition or indirect (at an adjacent airport) competition will manage their yield in a manner that is traditional for their sector of the industry, but where this will be affected by the yield management process of the competitors. This paper draws on evidence of airline price setting when there is direct competition. It would seem that there is evidence of price leadership and more generally of a strong correlation between the fares of the differentiated product that the airlines offer in competition. © 2005 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.
Volume (Year): 39 (2005)
Issue (Month): 3 (September)
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Web page: http://www.bath.ac.uk/e-journals/jtep
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- Claudio A. Piga & Enrico Bachis, 2006. "Pricing strategies by European traditional and low cost airlines. Or, when is it the best time to book on line?," Discussion Paper Series 2006_14, Department of Economics, Loughborough University, revised Jul 2006.
- Claudio A. Piga & Enrico Bachis, 2007.
"Hub Premium, Airport Dominance and Market Power in the European Airline Industry,"
Discussion Paper Series
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- Enrico Bachis & Claudio A. Piga, 2006. "Hub Premium, Airport Dominance and Market Power in the European Airline Industry," Rivista di Politica Economica, SIPI Spa, vol. 96(5), pages 11-54, September.
- Pitfield, D.E., 2008. "Some insights into competition between low-cost airlines," Research in Transportation Economics, Elsevier, vol. 24(1), pages 5-14.
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