Assessing predation in airline markets with low-fare competition
Assessment of unfair competitive practices in airline markets has traditionally been based on the analysis of changes in average fares, revenue and traffic following low-fare entry. This paper demonstrates the severe limitations of using such measures. In particular, the authors' case studies show that despite very different perceptions by some analysts of apparent incumbent carrier response to entry, average fares, revenues and traffic measures showed very similar patterns of change. The authors then use a competitive airline market simulation to illustrate the importance of often ignored factors - revenue management and the flows of connecting network passengers on the flight legs affected by low-fare entry - in explaining the effects of entry on these aggregate measures of airline performance. These simulation results further reinforce the danger in using such measures as indicators of predatory behavior in airline markets.
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Availability:
- Find a library where document is available. Order URL: http://worldcat.org/issn/09658564
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Supplemental Notes:
- Abstract reprinted with permission from Elsevier
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Authors:
- Gorin, Thomas
- Belobaba, Peter
- Publication Date: 2008-6
Language
- English
Media Info
- Media Type: Print
- Features: Figures; References; Tables;
- Pagination: pp 784-798
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Serial:
- Transportation Research Part A: Policy and Practice
- Volume: 42
- Issue Number: 5
- Publisher: Elsevier
- ISSN: 0965-8564
- Serial URL: http://www.sciencedirect.com/science/journal/09658564
Subject/Index Terms
- TRT Terms: Airlines; Case studies; Competition; Evaluation and assessment; Fares; Full service carriers; Low cost carriers; Simulation; Yield management
- Uncontrolled Terms: Passenger flow
- Subject Areas: Aviation; Planning and Forecasting;
Filing Info
- Accession Number: 01103110
- Record Type: Publication
- Files: TRIS
- Created Date: Jun 24 2008 7:44AM