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Following deregulation, the airline industry has dramatically changed. In addition to numerous mergers and bankruptcies, the industry has also seen an influx of small, “low-cost” carriers who offer differentiated competition to the traditional legacy carriers. These low-cost carriers traditionally avoided the hub-and-spoke networks of legacy carriers, offering point-to-point service often on adjacent routes. However, events of the past 10–15 years, including the terrorist attacks of 9/11, rising fuel prices, and economic recessions, have led to a shift in the operations of these airlines. The legacy carriers have unbundled many of their services, most notably through baggage fees, seeking to improve efficiency. Low-cost carriers have expanded services into major airports and have shifted to more direct route level competition with the legacy carriers as they use their cost efficiency advantages to their advantage. In this chapter, we examine airport and route choice decision to serve by legacy and low-cost carriers over time. Our descriptive and econometric models point to convergence of operations in terms of the airports and routes that low-cost and legacy carriers serve, with the implication that the current competitive atmosphere improves efficiency as the distinctions between legacy and low-cost carriers have become less obvious.

As the wave of liberalization and deregulation have accelerated to relieve rigid controls over airline routes, capacity, and fare setting regimes, Low Cost Carriers (LCCs) have emerged especially in local aviation markets since the 1970s.

This paper has studied the effects of LCC's entry into the domestic aviation market which was pre-occupied by two major carriers, Korean Air (KAL) and Asiana Airlines. Through a simple model describing two situations, prior and post to LCC's entry, we analyzed changes and trends of each airline's output and profit based on the Cournot and two-stage Stackelberg game equilibrium.

In summary, our conclusion consists of five points: (1) Even though JIN Air's entry reduced KAL's respective output and profit, the more JIN Air produces, the higher the joint-profit of KAL and JIN Air is, (2) From the joint-profit aspect, increasing KAL's output to a level than JIN Air's is more profitable on the Gimpo-Jeju route, on the other hand, increasing JIN Air's output higher than KAL's is more profitable on the Jeju-Busan route, (3) Even though JIN Air's entry increase Asiana Airline's output, the more JIN Air produces, the less Asiana Airlines's profit is, (4) Total output in markets as well as total profits of firms will increase under certain conditions, (5) KAL and JIN Air tend to get caught in an unresolved conflict on level of LCC cost.

In the first two decades of the twenty-first century, low-cost carriers grew rapidly in many low- and middle-income economies. In this chapter, we examine the geography and network structure of low-cost carriers in such economies across Asia in 2018. We use these analyses to explore the relationship between budget airlines and economic development. Levels of disposable income and infrastructure adequacy help to account for the significance of low-cost airlines in some middle-income economies. And in turn, these airlines by fostering higher levels of accessibility and personal mobility may help catalyze faster development. However, the environmental externalities associated with aviation, especially atmospheric emissions, raise concerns about the sustainability of this mode. We assess these concerns and focus in particular on the development of low-cost carriers fleets in Asia. We ask whether the acquisition of more fuel-efficient aircraft will ameliorate aviation's environmental impact.

The low-cost carrier's model made remarkable gains across the globe in the prior decade, although growth was uneven domestically and intraregionally. Within this region, there are significant differences in overall country size, the size of the domestic aviation market, and the number of carriers serving the market. The largest and most developed market is in Russia, but rest of the region also experienced growth in economy airlines' activity as they discovered the power of the model to expand aviation access and lower costs. The success of low-cost carriers, however, has been halting and hampered by government decisions on foreign investment, ownership, and leasing. Still, some carriers have been able to grow and achieve gains over rivals. The recent Russian-Ukrainian war has further complicated the situation.

The purpose of this paper is to explore the changing face of airline quality by analyzing the reported service and safety data for the traditional and low cost carriers.

Data were gathered from Department of Transportation records on service and safety quality from 1996‐2004. A safety rate was calculated for each carrier by adding accidents, incidents, near mid‐air collisions, and pilot deviations and dividing the total number by yearly departures. The service rate was calculated by adding all complaint categories and dividing by yearly departures. Averages and confidence intervals were calculated. Analysis of variance was performed on group means.

The findings of this study indicate that the low cost carrier group examined here has closed the gap on its traditional rivals in the area of safety quality, posting safety rates that are not statistically different from the traditional carriers over the period of this study. On the other hand, it has not as a group yet addressed the problem of basic service quality, posting a statistically lower level of quality (as measured by consumer complaints).

The study did not specifically examine airline amenities such as seat pitch, schedule, meals, or in‐flight entertainment.

Low cost airlines appear well placed to continue taking market share away from their traditional rivals who continue to struggle with high costs.

This paper is the first to examine the changing dynamics between traditional and low cost carriers following September 11.

No‐frills carriers have revolutionized Europe's aviation market and have changed the airline business in a dramatic way. Having entered most of the countries in Central Europe, the wave has also reached the Baltics. The purpose of this paper is to reveal how a Scandinavian carrier entered the market with a subsidiary airline, by combining elements of low‐cost and traditional carriers.

The paper starts by giving a brief overview of the different airline operating philosophies. It is followed by an introduction into the Nordic airline market. The main focus will be on the operating strategy of Air Baltic and its relation towards the extension policy of Scandinavian Airlines.

The paper provides an independent and structured analysis about the strategy of Air Baltic. Theory was applied to determine how much the airline was influenced by the “low‐fare wave” of the aviation branch and its implications. The hybrid character of Air Baltic reflects the Central European/Baltic business environment.

Research is partly limited to the information published by the airline itself. Because international aviation journals have not yet covered Air Baltic, newspapers and popular journals were used as a base of information. To fill this gap, two semi‐structured interviews with Air Baltic executives were carried out.

The study is a useful source of information for scientists and managers dealing with the airline industry or/and the Baltic Sea region. Lecturers might use the paper for case‐based courses.

This paper is one of the first comprehensive publications in the English language about Air Baltic and the Baltic aviation market.

Strategic management and marketing.

Executive education; postgraduate; undergraduate.

By 2004, the low-cost carrier model had just recently been introduced to Southeast Asia. Airlines under this model quickly began taking market share. Singapore's first budget carrier, Valuair, finds itself in fierce competition between two rapidly emerging competitors in the second half of 2004. Valuair needs to expand in order to remain competitive. However, for this to happen the company needs additional access to capital. The CEO, Sim Kay Wee, has begun pitching to investors that his company is a smart low-risk investment. Is Sim right, given Valuair's competitive position and the market environment in which it operates?

Students will be able to apply strategic frameworks in order to develop an understanding of Valuair's market position and use this understanding to advice investment decisions.

Teaching notes are available for educators only. Please contact your library to gain login details or e-mail support@emeraldinsight.com to request teaching notes.

The passenger air travel market has recently been impacted by two major innovations: first, in the 1990s, the rise of “low-cost carrier” (LCC) airlines offering cheap one-way point-to-point tickets, and then, in the new millennium, the emergence and enthusiastic adoption by consumers of online Internet booking systems. It has been suggested that the transparency of Internet booking would result in only the lowest fare offerings being sustainable in the market, and the simplicity and efficiency of LCCs would mean that it would be their fares that would be the lowest.

To present a decision support system (DSS) enabling the analysis of the cost‐effectiveness of direct‐shipping long‐haul road transport policies, including full truck load (FTL) and less than truck load (LTL) modes, and to select the optimal carrier.

Analytical estimation of transportation costs is provided in a framework including an interactive computer procedure and a dedicated database structure capable of characterizing the logistics system.

Main criticalities of manual logistic planning are: sub‐optimal selection of carrier and excessive use of LTL transport, while the optimal FTL vs LTL trade‐off is not fully explored in practice.

This is an analysis tool of user‐defined scenarios and does not provide the automatic synthesis of shipments planning. Admittedly, this model does not attempt to optimize the shipping strategy, but to quantitatively assess the effects of the adopted decisions.

Alternative shipping policies can be compared to perform what‐if analyses and explore the outcome of alternative decisions (FTL vs LTL shipping modes) even in terms of transportation expenditures. Allows rapid selection of the optimal motor carrier and assesses the extra cost due to a sub‐optimal choice. Gives the experienced manager a framework for critical assessment of shipping decisions, suggesting improvement areas for cost reduction.

With respect to other software tools for carrier selection provides explicit analysis of extra costs incurred by manual planning, thus becoming a strategic tool for logistic decision making. Furthermore, enables managerial insights to be gained and makes manual planning more effective.

The purpose of this paper is to analyse the role of switching costs (SwCs) on established firm cost behaviour towards a competitive entry in the Spanish domestic airline market, taking into account the entrant profile and airport capacity restrictions.

The dynamic model is based on information of 193 Spanish domestic routes in which incumbents react to entrants (quarterly data during 10 years, 620 reactions are analysed). The balanced panel used is constructed by setting up a multiple-source database based on accounting and industrial engineering procedures.

Results show that both entrant profile and regulatory constraints conditions incumbent cost reaction (CR) to entry at the route-level. Regression models show that the relationship between SwCs and incumbent reaction is moderated by the entrant profile and the regulatory conditions of the market.

This study reveals the importance of policy measures aimed at reducing firm market power and increasing consumer protection in the airline industry, in which SwCs are artificially created at the company’s discretion and where operating costs at the route-level need to be evaluated together with the various service elements.

This study complements current literature related to incumbent CR to entry in the airline industry since it analyses the specific reaction performed by a carrier at the route-level. Moreover, it analyses the whole set of routes in the Spanish domestic market rather than a selection of it. It also explicitly includes three alternative measures of SwCs that can influence such incumbent reaction.

Esta investigación analiza el papel de los costes de cambio en el comportamiento en costes de las empresas establecidas ante las entradas competitivas en el mercado aéreo nacional español, teniendo en cuenta el perfil de los entrantes y las restricciones de capacidad de los aeropuertos.

El modelo dinámico propuesto se basa en la información de 193 rutas nacionales españolas en las que los implicados reaccionan ante los nuevos entrantes (datos trimestrales durante 10 años, se analizan 620 reacciones). El panel equilibrado utilizado se construye configurando una base de datos de múltiples fuentes basada en procedimientos de contabilidad de costes e ingeniería industrial.

Los resultados muestran que tanto el perfil del entrante como las restricciones a la entrada condicionan la reacción en costes del implicado ante la entrada a nivel de ruta. Los resultados de las regresiones muestran que la relación entre los costes de cambio y la reacción del implicado está moderada tanto por el perfil del entrante como por las condiciones regulatorias del mercado.

Este estudio revela la importancia de las medidas de política destinadas a reducir el poder de mercado de las empresa y a aumentar la protección del consumidor en el sector de las aerolíneas, en las que los costes de cambio se crean artificialmente a discreción de la compañía y donde los costes operativos a nivel de ruta deben evaluarse juntos con diversos elementos de servicio.

Este estudio complementa la literatura actual relacionada con la reacción del implicado ante la entrada en el sector de las aerolíneas, ya que analiza la reacción específica realizada por las compañías a nivel de ruta. Además, analiza de forma exhaustiva el conjunto de rutas en el mercado nacional español en lugar de una muestra de ellas. También, incluye explícitamente tres medidas alternativas de costes de cambio que pueden influir en dicha reacción predominante.