The Entry of Low-Cost Airlines: Price Competition in the European Airline Market
Marco Alderighi (),
Alessandro Cento (),
Peter Nijkamp and
Additional contact information
Marco Alderighi: CERTeT - Bocconi University, Milan
Alessandro Cento: KLM Royal Dutch Airlines, Revenue Management Dept, Milan
No 04-074/3, Tinbergen Institute Discussion Papers from Tinbergen Institute
This paper investigates the response of full service carriers (FSCs) to theentry of low-cost carriers (LCCs). We develop a model of airlinecompetition, which accommodates various market structures, some ofwhich include low-cost players. Using data on published airfares ofLufthansa, British Airways, Alitalia and KLM for the main city-pairs fromItaly to the rest of Europe, our statistical modelling resu1ts confirm theconclusions of the theoretical model. Competition among FSCs appears toaffect the price levels of business and leisure segments asymmetrically. Incontrast, competition with LCCs reduces the fares of FSCs in all classesproportionally.
Keywords: Pricing strategies; yield management; low-cost carriers; European airline market (search for similar items in EconPapers)
JEL-codes: D43 L15 L93 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20040074
Access Statistics for this paper
More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute Contact information at EDIRC.
Bibliographic data for series maintained by Tinbergen Office +31 (0)10-4088900 ().