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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  • Authors:
    • Hüschelrath, Kai
    • Muller, Kathrin
  • Publication Date: 2014-3

Language

  • English

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 01531962
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 9 2014 9:58AM