The Entry Effect of Low Cost Carriers in the Airline Market

D. Seliverstov ()

Journal of Modern Competition, 2017, vol. 11, issue 2, 83-95

Abstract: The low cost airlines are aggressively expanding into new markets in most countries. LCC effect has captured the interest of government bodies and academia. However the LCC phenomenon receives little attention in Russian academic research. With the aim of understanding the role and impact of low cost carriers on civil aviation development the article intends to compare the entry effects of NWCs and LCCs on market yield and demand in the U.S. airline market. According to my research low cost carriers have more pronounced short-term and long-term impact on both market parameters regardless of its structure and participants. Entry of budget airlines leads to substantial fare reduction as well as increase in passenger traffic. Taking into account this effect LCCs are considered to be the main driver of competition in the airline market and important welfare-enhancing factor.

Keywords: airline market; network carriers; market structure; competition; entry effect; panel data (search for similar items in EconPapers)
Date: 2017
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