[PDF] Dynamic Oligopoly Behaviour In The Airline Industry eBook

Author : Victor Aguirregabiria
Publisher :
Page : 48 pages
File Size : 22,98 MB
Release : 2016
Category :
ISBN :

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This paper studies the contribution of demand, costs, and strategic factors to the adoption of hub-and-spoke networks in the US airline industry. Our results are based on the estimation of a dynamic oligopoly game of network competition using data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company in the routes between the 55 largest US cities. As methodological contributions of the paper, we propose and apply a method to reduce the dimension of the state space in dynamic games, and a procedure to deal with the problem of multiple equilibria when implementing counterfactual experiments. Our empirical results show that the most important factor to explain the adoption of hub-and-spoke networks is that the sunk cost of entry in a route declines importantly with the number of cities that the airline connects from the origin and destination airports of the route. For some carriers, the entry deterrence motive is the second most important factor to explain hub-and-spoke networks.

Author : Nan Chen
Publisher :
Page : 0 pages
File Size : 22,84 MB
Release : 2022
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Dynamic pricing is a common tool to maximize sales in markets for perishable goods with limited capacity and stochastic demand. We look at the relationship between dynamic pricing and oligopolistic competition in the airline industry. For this purpose, we estimate the dynamic oligopoly model of dynamic pricing competition in a market with carrier exit using flight-level data. We discover that dynamic pricing results in a Pareto improvement, increasing firm profits and consumer welfare. We break down the impact into two categories: price discrimination and pricing on residual capacity (revenue management). We find that price discrimination softens competition, whereas revenue management intensifies it.

Author : Yao-Yu Tsai
Publisher :
Page : 202 pages
File Size : 19,32 MB
Release : 2021
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This thesis seeks to analysis how airlines can better conceive and implement digital transformation strategy to ensure competitive advantages as a response to the dawn of digital era. This thesis particularly focuses on the competitive dynamics of targeted airlines in a specific oligopolistic market structure, and analyzes behaviors and patterns between competitors when applying digital transformation initiatives. The actions, reactions, results, and meanings behind the interactions are examined step by step through a backward perspective. The literature review presents relevant definitions of digital transformation, oligopolistic competition and competitive dynamics. The analysis was further conducted through different stages, specifically competitor mapping, performance comparison, and awareness-motivation-capability model (AMC). The study has conducted the competitor mapping measurement twice at two different time, and observed the change of competitor viewpoints. 3 substantial digital implementations taken by China Airlines and EVA Air from 2015 to 2019 were selected and analyzed using AMC. Research findings and implications suggests that digital transformation strategy, viewed as the consistent use of technology in transforming customer experience, is positively correlated with gaining competitive advantage, thus elevating the overall performance of the company. Above all, research results show that awareness is less important in this oligopolistic market structure, but motivation, and capability are critical, and even predominant. Awareness tends not to be an issue in the airline industry as market incumbents are well-defined, and even familiar with one another. Concerning motivation, direct customer interaction is a decisive motivation for airlines to take part in digital transformation. Regarding capability, airlines are mostly copy and pasting identical or similar resource, products, or systems in the digital trend, indicating that the first-mover advantage in the Stackelberg model prevails in a competitive market with limited incumbents such as the airline industry in Taiwan.

Author : Alessandro Cento
Publisher : Springer Science & Business Media
Page : 189 pages
File Size : 32,30 MB
Release : 2008-10-15
Category : Business & Economics
ISBN : 3790820881

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The debate on the future of the aviation sector and the viability of its traditional business practices is the core of this book. The liberalization of the EU market in the 1990s has radically modi?ed the competitive environment and the nature of airline competition. Furthermore, the new millennium began with terrorist attacks, epidemics, trade globalization, and the rise of oil prices, all of which combined to push the industry into a “perfect storm”. Airline industry pro?tability has been an elusive goal for several decades and the recent events has only accentuated existing weaknesses. The main concern of ind- try observers is whether the airline business model, successful during the 1980s and 1990s, is now sustainable in a market crowded by low-cost carriers. The airlines that will respond rapidly and determinedly to increase pressure to restructure, conso- date and segment the industry will achieve competitive advantages. In this context, the present study aims to model the new conduct of the ‘legacy’ carriers in a new liberalized European market in terms of network and pricing competition with l- cost carriers and competitive reaction to the global economic crises.

Author : Peter Forsyth
Publisher : Routledge
Page : 375 pages
File Size : 50,58 MB
Release : 2018-01-18
Category : Business & Economics
ISBN : 1351161393

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Prior to liberalization, there was little scope for predatory behaviour in the aviation market. However, following deregulation, new entrants sought to compete with entrenched incumbents. Low-cost carriers (LCCs) gained significant market share, which in turn provoked many different kinds of defensive response. Having put pressure on established carriers, low-cost airlines are themselves feeling the pressure of competition from new operators. While it is normal and natural for airlines to react to competition - modifying their services, the ways in which they offer them and their prices - when does aggressive commercial behaviour go too far and become predation? This book considers what exactly is meant by 'predation' in the aviation environment, and explores the strategies LCCs adopt in order to gain market share, as well as the strategies of the established airlines in response to competition from new entrants to the market. It also addresses the key question of what competition policy should do to ensure intensive competition. Competition versus Predation in Aviation Markets brings together contributions from around the world, from airlines, government agencies, leading academics and consultants, providing a wealth of perspectives on a business practice crucial to airline survival.

Author : Volker Schmid
Publisher : GRIN Verlag
Page : 37 pages
File Size : 23,63 MB
Release : 2011-12
Category : Business & Economics
ISBN : 3640914465

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Seminar paper from the year 2005 in the subject Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media, grade: A, University of Teesside (Teesside Business School), course: Consumer Behaviour, 10 entries in the bibliography, language: English, abstract: To analyse the consumer behaviour presents an important criteria to be successful in the airline industry. This text gives answers to most relevant questions regarding consumer behaviour, using Air Lingus as an example. Finally, it includes a plan to implement a relationship marketing programme.

Author : Giovanni Alberto Tabacco
Publisher : Palgrave Macmillan
Page : 78 pages
File Size : 31,48 MB
Release : 2018-06-29
Category : Business & Economics
ISBN : 9783319835723

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This book presents an original empirical investigation of the market structure of airline city pair markets, shedding new light on the workings of competitive processes between firms. Examining a cross-section of US airline city pairs, Tabacco proposes for the first time that the industry can be understood as a natural oligopoly, each airline market being dominated by one to three airline carriers regardless of market size. The author questions the extent to which airlines deliberately prevent head-to-head competition within city pair markets, and draws intriguing conclusions about competitive forces from the observed market structure. Uncovering some of the main corporate strategies of the airline industry, the book is of immediate relevance to industry managers and practitioners, as well as academic economists.