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- Title
From the Fringe to the Forefront: Low Cost Carriers and Airline Price Determination.
- Authors
Kwoka, John; Hearle, Kevin; Alepin, Phillippe
- Abstract
Low-cost carriers (LCCs) have transformed the US airline industry. They are now much larger and have moved into more direct competition with legacy carriers. This paper re-examines airline fare determination in this transformed industry. It finds that LCCs have a much larger fare impact than do legacies, but that their fare-reducing effect diminishes as they become dominant on a route. It also finds that legacy carriers primarily affect each others' prices, whereas LCCs have a significant impact on pricing by both other LCCs and legacies. These and other results suggest a new and more nuanced role for LCCs in the domestic airline industry.
- Subjects
UNITED States; LOW cost airlines; AIRLINE industry; AIRLINE rates; ECONOMIC competition; AIRLINE industry &; economics
- Publication
Review of Industrial Organization, 2016, Vol 48, Issue 3, p247
- ISSN
0889-938X
- Publication type
Article
- DOI
10.1007/s11151-016-9506-3