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Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns

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  • Homsombat, Winai
  • Lei, Zheng
  • Fu, Xiaowen

Abstract

This paper investigates the effects of the airlines-within-airlines strategy adopted by Qantas airline group, which simultaneously runs a full-service airline (Qantas Airways) and a low-cost carrier (Jetstar Airways). Our empirical investigation of airline pricing and route entry patterns in the Australian domestic market suggests that Jetstar has been used as a fighting brand against rival low cost carriers. Such a strategy increases group airlines’ prices at the expenses of rival airlines. There is preliminary evidence that pricing benefits to Qantas Group come from increased market power as well as service quality improvements.

Suggested Citation

  • Homsombat, Winai & Lei, Zheng & Fu, Xiaowen, 2014. "Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 1-16.
  • Handle: RePEc:eee:transe:v:63:y:2014:i:c:p:1-16
    DOI: 10.1016/j.tre.2013.12.008
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:jaitra:v:64:y:2017:i:pb:p:101-112 is not listed on IDEAS
    2. repec:eee:transa:v:112:y:2018:i:c:p:46-59 is not listed on IDEAS
    3. Fu, Xiaowen & Oum, Tae Hoon & Chen, Ruowei & Lei, Zheng, 2015. "Dominant carrier performance and international liberalization – The case of Northeast Asia," Transport Policy, Elsevier, vol. 43(C), pages 61-75.
    4. repec:eee:jaitra:v:64:y:2017:i:pb:p:139-150 is not listed on IDEAS
    5. repec:eee:transe:v:111:y:2018:i:c:p:101-112 is not listed on IDEAS
    6. repec:eee:transa:v:103:y:2017:i:c:p:472-489 is not listed on IDEAS
    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. Wanke, Peter & Pestana Barros, Carlos & Chen, Zhongfei, 2015. "An analysis of Asian airlines efficiency with two-stage TOPSIS and MCMC generalized linear mixed models," International Journal of Production Economics, Elsevier, vol. 169(C), pages 110-126.
    9. Whyte, Randall & Lohmann, Gui, 2015. "The carrier-within-a-carrier strategy: An analysis of Jetstar," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 141-148.

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