Highlights ► We model carrier pricing policy in line with its practice of exploiting passenger heterogeneity by charging multiple fares. ► Posted fares of full-service carriers vary in response to competitor type. ► A full-service opponent induces a fall mainly in business fares; a low-cost contender provokes an overall drop of fares.

    Abstract This paper investigates the price-setting behavior of full-service airlines in the European passenger aviation market. We develop a model of airline competition, which accommodates various market structures, some of which include low-cost players. Using data on published airfares of Lufthansa, British Airways, Alitalia and KLM for the main city-pairs from Italy to the rest of Europe, our empirical findings substantially confirm the propositions of the theoretical model. We find that competition among full-service carriers appears to affect the price levels of the business and the leisure segments asymmetrically: there are small reductions in the leisure segments and significant reductions in the business segment of the aviation market. In contrast, competition with low-cost carriers reduces both the business and leisure fares of full-service carriers quite uniformly, with an emphasis on the mid-segment fares.


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    Titel :

    Competition in the European aviation market: the entry of low-cost airlines


    Beteiligte:
    Alderighi, Marco (Autor:in) / Cento, Alessandro (Autor:in) / Nijkamp, Peter (Autor:in) / Rietveld, Piet (Autor:in)

    Erschienen in:

    Erscheinungsdatum :

    2012-01-01


    Format / Umfang :

    11 pages




    Medientyp :

    Aufsatz (Zeitschrift)


    Format :

    Elektronische Ressource


    Sprache :

    Englisch





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