Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86436
Authors: 
Alderighi, Marco
Cento, Alessandro
Nijkamp, Peter
Rietveld, Piet
Year of Publication: 
2004
Series/Report no.: 
Tinbergen Institute Discussion Paper 04-074/3
Abstract: 
This paper investigates the response of full service carriers (FSCs) to theentry of low-cost carriers (LCCs). We develop a model of airlinecompetition, which accommodates various market structures, some ofwhich include low-cost players. Using data on published airfares ofLufthansa, British Airways, Alitalia and KLM for the main city-pairs fromItaly to the rest of Europe, our statistical modelling resu1ts confirm theconclusions of the theoretical model. Competition among FSCs appears toaffect the price levels of business and leisure segments asymmetrically. Incontrast, competition with LCCs reduces the fares of FSCs in all classesproportionally.
Subjects: 
Pricing strategies
yield management
low-cost carriers
European airline market
JEL: 
D43
L15
L93
Document Type: 
Working Paper

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