The impact of low cost airline entry on competition, network expansion, and stock valuations

The authors conduct event studies and statistical analysis to explore the impact of low cost carriers' entry on legacy airline stock prices. Oligopoly structures, entry barriers, and high fixed costs make the airline industry highly susceptible to competitive and network expansion impact of low cost airlines' entry. Positive stock returns are observed, which the authors interpret as the spillover effects of network expansion. Thus, rising passenger traffic and improved connectivity increase the revenues of legacy airlines to sufficiently offset the low cost carriers' competitive threats.

• Record URL:
  • http://www.sciencedirect.com/science/article/pii/S0969699711000949
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/oclc/31005945
• Supplemental Notes:
  • Abstract reprinted with permission from Elsevier.
• Authors:
  • Detzen, Dominic
  • Jain, Pankaj K
  • Likitapiwat, Tanakorn
  • Rubin, Rose M
• Publication Date: 2012-1

Language

• English

Media Info

• Media Type: Print
• Features: Figures; References; Tables;
• Pagination: pp 59-63
• Serial:
  • Journal of Air Transport Management
  • Volume: 18
  • Issue Number: 1
  • Publisher: Elsevier
  • ISSN: 0969-6997
  • Serial URL: http://www.sciencedirect.com/science/journal/09696997

Subject/Index Terms

• TRT Terms: Airlines; Barriers to entry (Competition); Full service carriers; Impact studies; Low cost carriers; Market structure; Stocks; Valuation
• Subject Areas: Administration and Management; Aviation; Economics; I10: Economics and Administration;

Filing Info

• Accession Number: 01361184
• Record Type: Publication
• Files: TRIS
• Created Date: Jan 25 2012 2:22PM