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Pricing, Competition and Policy in Australasian Air Travel Markets

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  • Tim Hazledine

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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  • Tim Hazledine, 2010. "Pricing, Competition and Policy in Australasian Air Travel Markets," Journal of Transport Economics and Policy, University of Bath, vol. 44(1), pages 37-58, January.
    • Handle: RePEc:tpe:jtecpo:v:44:y:2010:i:1:p:37-58
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    Citations

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    Cited by:

    1. Nicolas De Roos & Gordon Mills & Stephen Whelan, 2010. "Pricing Dynamics in the Australian Airline Market," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 545-562, December.
    2. Dresner, Martin & Eroglu, Cuneyt & Hofer, Christian & Mendez, Fabio & Tan, Kerry, 2015. "The impact of Gulf carrier competition on U.S. airlines," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 31-41.
    3. Wang, Kun & Tsui, Wai Hong Kan & Li, Lan-Bing & Lei, Zheng & Fu, Xiaowen, 2020. "Entry pattern of low-cost carriers in New Zealand - The impact of domestic and trans-Tasman market factors," Transport Policy, Elsevier, vol. 93(C), pages 36-45.
    4. 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.
    5. Zhang, Yahua & Sampaio, Breno & Fu, Xiaowen & Huang, Zhibin, 2018. "Pricing dynamics between airline groups with dual-brand services," Transportation Research Part A: Policy and Practice, Elsevier, vol. 112(C), pages 46-59.
    6. Hazledine, Tim, 2010. "Oligopoly price discrimination with many prices," Economics Letters, Elsevier, vol. 109(3), pages 150-153, December.
    7. Zuidberg, Joost, 2014. "Identifying airline cost economies: An econometric analysis of the factors affecting aircraft operating costs," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 86-95.
    8. David Gillen & Tim Hazledine, 2016. "Pricing of Regional Airline Services in Australia and New Zealand, 2011–2015," Economic Papers, The Economic Society of Australia, vol. 35(2), pages 87-98, June.
    9. Singh, Jagroop & Sharma, Somesh Kumar & Srivastava, Rajnish, 2019. "What drives Indian Airlines operational expense: An econometric model," Journal of Air Transport Management, Elsevier, vol. 77(C), pages 32-38.

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