Some insights into competition between low-cost airlines

D.E. Pitfield

Research in Transportation Economics, 2008, vol. 24, issue 1, 5-14

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.

Keywords: Low-cost; airlines; Pricing; strategy; Competition (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (6)

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