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Some insights into competition between low-cost airlines

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  • Pitfield, D.E.

Abstract

The phenomenon of the wide world growth in low-cost airlines has resulted in a focus on their pricing strategies, on issues of cost recovery and on their impact on the traffic and market shares of legacy carriers or other low-cost carriers when they are in competition, either directly or at adjacent airports. This paper provides a brief overview of the characteristics of these low-cost carriers as well as their history and geography. It goes on to outline ways in which these carriers compete and manage demand, ranging from price competition to advertising; some of these methods directly reflect their special characteristics. Some empirical evidence is presented which indicates a correlation in fare setting behaviour between competitors and insights are offered on cost recovery. The impact of the start-up of low-cost carriers is also analysed, focusing on their impacts on other low-cost carriers. The case of Ryanair competing with easyJet on London-Venice is examined along with Southwest and Frontier on Denver-Las Vegas.

Suggested Citation

  • Pitfield, D.E., 2008. "Some insights into competition between low-cost airlines," Research in Transportation Economics, Elsevier, vol. 24(1), pages 5-14.
    • Handle: RePEc:eee:retrec:v:24:y:2008:i:1:p:5-14
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    References listed on IDEAS

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    1. Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
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    6. D. E. Pitfield, 2005. "Some Speculations and Empirical Evidence on the Oligopolistic Behaviour of Competing Low-Cost Airlines," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 379-390, September.
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    Cited by:

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