An analysis of price competition and price wars in Australia's domestic airline market

Ma, Wenliang and Wang, Qiang and Yang, Hangjun and Zhang, Yahua ORCID: https://orcid.org/0000-0003-1522-3402 (2019) An analysis of price competition and price wars in Australia's domestic airline market. Transport Policy, 81. pp. 163-172. ISSN 0967-070X


Abstract

Price cuts and price wars, a frequent phenomenon in Australia's domestic airline market that have been widely reported in the Australian news media, are documented in this research. This paper examines the determinants of price wars in Australia using monthly data from 72 airline routes for the period from January 2013 to August 2017. Our finding is consistent with the widely held view that an increase in the major airlines' capacity was a main cause of price cuts and price wars. Our research shows that price wars continued after Qantas announced that it would stop adding domestic capacity and give up defending its 65% market share policy in 2015. Indeed, Qantas' 65% market share commitment has led to fierce pricing competition and the occurrence of price wars. Multimarket contact promoted price wars in Australia's domestic airline market.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Files associated with this item cannot be displayed due to copyright restrictions.
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Commerce (1 July 2013 -)
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Commerce (1 July 2013 -)
Date Deposited: 28 Jan 2020 05:59
Last Modified: 29 Jan 2020 05:25
Uncontrolled Keywords: Price wars; Australian airline market; Multimarket contact; Full-service airlines; Low-cost carriers
Fields of Research : 15 Commerce, Management, Tourism and Services > 1507 Transportation and Freight Services > 150701 Air Transportation and Freight Services
14 Economics > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation
14 Economics > 1402 Applied Economics > 140217 Transport Economics
Socio-Economic Objective: B Economic Development > 88 Transport > 8803 Aerospace Transport > 880302 Air Passenger Transport
Identification Number or DOI: doi:doi.org/10.1016/j.tranpol.2019.06.008
URI: http://eprints.usq.edu.au/id/eprint/37455

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