Competitive effects of the airlines-within-airlines strategy - Pricing and route entry patterns

Winai Homsombat, Zheng Lei, Xiaowen Fu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

41 Citations (Scopus)

Abstract

This paper investigates the effects of the airlines-within-airlines strategy adopted by Qantas airline group, which simultaneously runs a full-service airline (Qantas Airways) and a low-cost carrier (Jetstar Airways). Our empirical investigation of airline pricing and route entry patterns in the Australian domestic market suggests that Jetstar has been used as a fighting brand against rival low cost carriers. Such a strategy increases group airlines' prices at the expenses of rival airlines. There is preliminary evidence that pricing benefits to Qantas Group come from increased market power as well as service quality improvements.

Original languageEnglish
Pages (from-to)1-16
Number of pages16
JournalTransportation Research Part E: Logistics and Transportation Review
Volume63
DOIs
Publication statusPublished - 1 Jan 2014
Externally publishedYes

Keywords

  • Airline competition
  • Airlines-within-Airlines strategy
  • Full-service airline
  • Low-cost carrier

ASJC Scopus subject areas

  • Business and International Management
  • Civil and Structural Engineering
  • Transportation

Cite this