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Airline network competition: Full-service airlines, low-cost airlines and long-haul markets

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  • Pels, Eric

Abstract

The paper discusses airline network competition. Low-cost airlines and conventional airlines have distinctly different strategies and network types. This determines their ability to compete with other airlines in specific markets. The paper discusses the lack of competition between conventional airlines in local markets, and sees why low-cost airlines are the primary source of competition in such markets. Conventional airlines are relatively strong on long-haul markets, using their networks to keep costs per seat relatively low. Charter airlines show that a long-haul low-cost strategy is feasible For scheduled low-cost airlines, this may be more difficult, but this does not automatically mean that low-cost airlines cannot enter thick long-haul markets.

Suggested Citation

  • Pels, Eric, 2008. "Airline network competition: Full-service airlines, low-cost airlines and long-haul markets," Research in Transportation Economics, Elsevier, vol. 24(1), pages 68-74.
    • Handle: RePEc:eee:retrec:v:24:y:2008:i:1:p:68-74
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    References listed on IDEAS

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    1. Severin Borenstein, 1992. "The Evolution of U.S. Airline Competition," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 45-73, Spring.
    2. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2003. "Access to and competition between airports: a case study for the San Francisco Bay area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(1), pages 71-83, January.
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    6. 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.
    7. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2000. "A note on the optimality of airline networks," Economics Letters, Elsevier, vol. 69(3), pages 429-434, December.
    8. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
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