IDEAS home Printed from https://ideas.repec.org/p/auc/wpaper/195.html

Oligopoly Behaviour in the Trans-Tasman Air Travel Market: TheCase of Kiwi International

Author

Listed:
  • Haugh, David
  • Hazledine, Tim

Abstract

The duopoly of Air New Zealand and Qantas serving the trans-Tasman air travel market was disturbed in August 1995 by the entry of a small former charter airline, Kiwi International, based in Hamilton, NZ. Kiwi exited into liquidation in September 1996. The intervening thirteen months saw the entry of a 'fighting brand' no-frills airline, Freedom Air, set up by Air New Zealand to compete directly with Kiwi, and then a general price war initiated by Qantas, which directly preceded Kiwi_s demise. Was the behaviour of the incumbent duopolists 'predatory', in the sense of being designed to drive the new entrant from the market? Standard tests based on comparisons of price and costs are inconclusive. The innovation of this paper is to model the oligopolistic behaviour of the firms before and after entry. It is found that the duopolists became substantially more 'competitive' during the price war period, consistent with an interpretation of intent to predate.

Suggested Citation

  • Haugh, David & Hazledine, Tim, 1999. "Oligopoly Behaviour in the Trans-Tasman Air Travel Market: TheCase of Kiwi International," Working Papers 195, Department of Economics, The University of Auckland.
    • Handle: RePEc:auc:wpaper:195
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2292/195
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tim Hazledine, 2004. "Application of the public benefit test to the air New Zealand/Qantas case," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 279-298.
    2. Xiaowen Fu & Mark Lijesen & Tae H. Oum, 2006. "An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers," Journal of Transport Economics and Policy, University of Bath, vol. 40(3), pages 425-447, September.
    3. Hazledine, Tim, 2006. "Competition Policy for the Trans-Tasman Air Travel Market: the 2005 ACT Decision and its Implications," Working Paper Series 3836, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    4. Justin P. Johnson & David P. Myatt, 2003. "Multiproduct Quality Competition: Fighting Brands and Product Line Pruning," American Economic Review, American Economic Association, vol. 93(3), pages 748-774, June.
    5. Lindsey, Robin & West, Douglas S., 2003. "Predatory pricing in differentiated products retail markets," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 551-592, April.
    6. Hazledine, Tim, 2006. "Pricing and Competition in Australasian Air Travel Markets," Working Paper Series 3840, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. 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.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:auc:wpaper:195. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Library Digital Development (email available below). General contact details of provider: https://edirc.repec.org/data/deaucnz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.