EconPapers    
Economics at your fingertips  
 

Airline competition in Indonesian domestic market: Airline-within-airline strategies and impact of the COVID-19 pandemic

Weicheng Wang, Xiangru Wu, Xiaowen Fu and Kun Wang

Transport Policy, 2024, vol. 156, issue C, 1-12

Abstract: This study investigates the competition among four carriers from two major airline groups in Indonesia, namely Indonesia group (Garuda Indonesia and Citilink of Garuda), and Lion Air group (Lion Air and Batik Air). An airline route choice econometric model in the spirit of Probit model is constructed and estimated to shed light on the interactions of the four airlines of these two groups. Specifically, our empirical examination accentuates how the two groups utilize the Airline-within-Airline (AWA) strategy, which refers to operating a full-service carrier (FSC) and a low-cost carrier (LCC) at the same time, and the impact of the COVID-19 pandemic. Our estimation results suggest that the established FSC, Garuda Indonesia, used its LCC subsidiary, Citilink, as a fighting brand against its LCC rivalry, Lion Air. By contrast, Lion Air established a FSC brand, Batik, to broaden the market coverage instead of purely as a fighting brand. This competition structure was however shifted by the COVID-19 pandemic. All carriers became more aggressive to serve the routes involving those major airports in the big cities with more price-inelastic travellers. The overlapping routes between Lion Air and Batik Air have increased during the pandemic. The routes serving the tourism destinations have been cut due to the drop of inbound overseas visitors during the pandemic.

Keywords: Indonesia; Airline-within-airline (AWA); Full-service carrier (FSC); Low-cost carrier (LCC); COVID-19 pandemic (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0967070X24002087
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:trapol:v:156:y:2024:i:c:p:1-12

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tranpol.2024.07.012

Access Statistics for this article

Transport Policy is currently edited by Y. Hayashi

More articles in Transport Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).

 
Page updated 2025-03-19
Handle: RePEc:eee:trapol:v:156:y:2024:i:c:p:1-12