The Value of Bluer Skies.-How Much Do Consumers Gain From Entry by Jetblue Airways in Long-Haul U.S. Airline Markets?
This article reports on a study that considered the impact of the low-cost airline carrier JetBlue Airways on the long-haul domestic U.S. airline market. The authors investigated the period of 2000 to 2009 and found that non-stop airfares were on average about 21% lower after the entry of JetBlue Airways. They found that the magnitude of the price effect depends on the pre-entry market structure. For example, entry into monopoly markets triggered an average price decrease of about 25%, but the respective average price drop for entries into oligopoly markets was approximately 15%. The authors undertook additional estimates of price and income elasticities for long-haul domestic U.S. flights. They note that JetBlue's long-haul entries led to a savings for U.S. consumers of about $661 million. The authors conclude with a brief discussion of the implications of these findings for the U.S. airline industry, contending that the low-cost/high-quality strategy of JetBlue Airlines will put additional pressure on the revenue and net income situation of network carries, particularly in long-haul markets.
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- Hüschelrath, Kai
- Muller, Kathrin
- Publication Date: 2014-3
- Media Type: Print
- Features: Appendices; References; Tables;
- Pagination: pp 131-157
- TRT Terms: Airlines; Aviation; Civil aviation; Low cost carriers; Passenger aircraft; Passenger transportation; Prices; Revenues; Tickets
- Identifier Terms: JetBlue Airways
- Subject Areas: Aviation; Economics; Operations and Traffic Management; I10: Economics and Administration;
- Accession Number: 01531962
- Record Type: Publication
- Files: TRIS
- Created Date: Jul 9 2014 9:58AM