Price rivalry in airline markets: a study of a successful strategy of a network carrier against a low-cost carrier
Juan Jiménez González () and
Jordi Perdiguero ()
No 201007, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics
Competition in airline markets may be tough. In this context, network carriers have two alternative strategies to compete with low-cost carriers. First, they may establish a low-cost subsidiary. Second, they may try to reduce costs using the main brand. This paper examines a successful strategy of the first type implemented by Iberia in the Spanish domestic market. Our analysis of data and the estimation of a pricing equation show that Iberia has been able to charge lower prices than rivals with its low-cost subsidiary. The pricing policy of the Spanish network carrier has been particularly aggressive in less dense routes and shorter routes.
Keywords: Airlines; competition; low-cost carriers JEL classification:L13; L59; L71 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-03, Revised 2010-03
New Economics Papers: this item is included in nep-ure
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Journal Article: Price rivalry in airline markets: a study of a successful strategy of a network carrier against a low-cost carrier (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:201007
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