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Pricing, Competition and Policy in Australasian Air Travel Markets

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  • Tim Hazledine
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    Abstract

    The paper investigates competition between the two incumbent legacy carriers on the New Zealand and Tasman routes, and the extent to which their pricing is constrained by new entry from a low cost carrier and a Fifth Freedom carrier. Price and other data on 1,001 flights on nineteen routes observed in 2004 and 2005 are analysed. The main findings of the paper are: (i) that routes on which Qantas competed with Air New Zealand (Air NZ) tended to have air fares around 20 per cent lower than routes served only by Air NZ; (ii) the entrants Emirates and Pacific Blue offered much lower fares across the Tasman, but yet could not achieve substantial market shares, implying that; (iii) these airlines do not offer much competitive constraint on the pricing of the legacy carriers. © 2010 LSE and the University of Bath

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    Bibliographic Info

    Article provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy (JTEP).

    Volume (Year): 44 (2010)
    Issue (Month): 1 (January)
    Pages: 37-58

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    Handle: RePEc:tpe:jtecpo:v:44:y:2010:i:1:p:37-58

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    Web page: http://www.bath.ac.uk/e-journals/jtep

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    Cited by:
    1. Hazledine, Tim, 2011. "Legacy carriers fight back: Pricing and product differentiation in modern airline marketing," Journal of Air Transport Management, Elsevier, vol. 17(2), pages 130-135.
    2. Hazledine, Tim, 2010. "Oligopoly price discrimination with many prices," Economics Letters, Elsevier, vol. 109(3), pages 150-153, December.

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