Network geographies and financial performances in low-cost carrier versus network carrier competition: The case of Norwegian versus SAS

This paper sheds further light on the competitive dynamics between low-cost carriers and network carriers through a case study of the network developments and financial performance of the low-cost carrier Norwegian and the network carrier SAS. The case study includes a comparison of the networks and financial indicators of both airlines for the period 2005–2019, using scheduled traffic data from the Official Airline Guide (OAG) and publicly available annual reports of both airlines. The results show that, regarding network focus and development, both airlines do not actively seek competition, but rather focus on their own business strategies, resulting in different network developments. This is especially remarkable for a low-cost carrier. In addition, Norwegian does not have the financial characteristics of large low-cost carriers, like Ryanair and easyJet. In fact, its liquidity and solvency are merely in line with those of large European network carriers. Recently, it has suffered from considerable losses, which likely affects its competitive strength. In general terms, the results suggest that low-cost carriers that do not have a low enough unit cost base and therefore are not profitable cannot generate massive competitive pressure for incumbent network carriers. At the same time, among those incumbents, the urgency to cut operating costs is instigated as a result of (the threat of) low-cost carrier competition.

• Record URL:
  • https://doi.org/10.1016/j.jtrangeo.2019.102462
• Record URL:
  • http://www.sciencedirect.com/science/article/pii/S0966692318305520
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/09666923
• Supplemental Notes:
  • © 2019 Elsevier Ltd. All rights reserved. Abstract reprinted with permission of Elsevier.
• Authors:
  • Zuidberg, Joost
• Publication Date: 2019-7

Language

• English

Media Info

• Media Type: Web
• Features: Figures; References;
• Pagination: 102462
• Serial:
  • Journal of Transport Geography
  • Volume: 79
  • Issue Number: 0
  • Publisher: Elsevier
  • ISSN: 0966-6923
  • Serial URL: http://www.elsevier.com/locate/jtrangeo

Subject/Index Terms

• TRT Terms: Airlines; Case studies; Competition; Financial analysis; Full service carriers; Geography; Low cost carriers; Networks
• Identifier Terms: Norwegian Air Shuttle; Scandinavian Airlines System
• Subject Areas: Administration and Management; Aviation; Finance;

Filing Info

• Accession Number: 01718104
• Record Type: Publication
• Files: TRIS
• Created Date: Sep 25 2019 1:50PM