Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns

Winai Homsombat, Zheng Lei and Xiaowen Fu

Transportation Research Part E: Logistics and Transportation Review, 2014, vol. 63, issue C, 1-16

Abstract: This paper investigates the effects of the airlines-within-airlines strategy adopted by Qantas airline group, which simultaneously runs a full-service airline (Qantas Airways) and a low-cost carrier (Jetstar Airways). Our empirical investigation of airline pricing and route entry patterns in the Australian domestic market suggests that Jetstar has been used as a fighting brand against rival low cost carriers. Such a strategy increases group airlines’ prices at the expenses of rival airlines. There is preliminary evidence that pricing benefits to Qantas Group come from increased market power as well as service quality improvements.

Keywords: Low-cost carrier; Full-service airline; Airlines-within-Airlines strategy; Airline competition (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (27)

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DOI: 10.1016/j.tre.2013.12.008

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