Price rivalry in airline markets: A study of a successsful strategy of a network carrier against a low-cost carrier

• Autores: Xavier Fageda Sanjuan, Juan Luis Jiménez González, Jordi Perdiguero
• Localización: Documents de Treball ( IREA ), Nº. 7, 2010
• Idioma: inglés
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• Dialnet Métricas: 2 Citas
• Resumen

  • 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.