Price rivalry in airline markets: a study of a successful strategy of a network carrier against a low-cost carrier
Competition in airline markets may be tough. In this context, network carriers have two alternative strategies to compete with low-cost carriers. First, they may establish a low-cost subsidiary. Second, they may try to reduce costs using the main brand. This paper examines a successful strategy of the first type implemented by Iberia in the Spanish domestic market. Our analysis of data and the estimation of a pricing equation show that Iberia has been able to charge lower prices than rivals with its low-cost subsidiary. The pricing policy of the Spanish network carrier has been particularly aggressive in less dense routes and shorter routes.
|Date of creation:||Mar 2010|
|Date of revision:||Mar 2010|
|Contact details of provider:|| Postal: |
Web page: http://www.ub.edu/irea/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ira:wpaper:201007. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alicia García)
If references are entirely missing, you can add them using this form.