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Estimating strategic responses to the march of a low cost carrier to primary airports

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  • Bettini, Humberto F.A.J.
  • Silveira, José Maria F.J.
  • Oliveira, Alessandro V.M.

Abstract

We empirically investigate the capacity responses of major incumbent airlines facing the entry of a new low cost carrier in a secondary airport of a multiple airports region. We develop an empirical model that allows for time-varying strategic responses, aiming at identifying possible degrees of route entry threat. We consider the case of the entry of Azul Airlines in the densest conurbation in Brazil. Our results suggest that the incumbents preemptively fortified their flight frequency positions on threatened routes to deter the anticipated march of the newcomer from the secondary airport toward the existing primary airports.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:transe:v:109:y:2018:i:c:p:190-204
    DOI: 10.1016/j.tre.2017.11.004
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    Cited by:

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    3. 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).
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    6. Tsunoda, Yushi, 2023. "Airport concession revenue sharing and entry deterrence," Economics of Transportation, Elsevier, vol. 33(C).

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    More about this item

    Keywords

    Multiple airports region; Preemption; Capacity; Entry; Air transportation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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