Pricing, Competition and Policy in Australasian Air Travel Markets

Tim Hazledine

16 citations0/0 files storedJournal of Transport Economics and Policy

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Aviation Industry Analysis and Trends Merger and Competition Analysis Transport and Economic Policies

Abstract

The paper investigates competition between the two incumbent legacy carriers on the New Zealand and Tasman routes, and the extent to which their pricing is constrained by new entry from a low cost carrier and a Fifth Freedom carrier. Price and other data on 1,001 flights on nineteen routes observed in 2004 and 2005 are analysed. The main findings of the paper are: (i) that routes on which Qantas competed with Air New Zealand (Air NZ) tended to have air fares around 20 per cent lower than routes served only by Air NZ; (ii) the entrants Emirates and Pacific Blue offered much lower fares across the Tasman, but yet could not achieve substantial market shares, implying that; (iii) these airlines do not offer much competitive constraint on the pricing of the legacy carriers.

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References

1989Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry 1993MERGERS AND MARKET POWER -- EVIDENCE FROM THE AIRLINE INDUSTRY.2008How do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines *1990Market Conduct in the Airline Industry: An Empirical Investigation 2001Actual, Adjacent, and Potential Competition Estimating the Full Effect of Southwest Airlines 2017The Impact of Low-Cost Carriers on Airport and Route Competition 2005Aircraft trip cost parameters: A function of stage length and seat capacity 2006An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers

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