Competition versus Predation in Aviation Markets

Chapter 14Why do Low Cost Carriers Arise and How can they Survive the Competitive Responses of Established Airlines?: A Theoretical Explanation

Markus Reisinger

1. Introduction

After the deregulation of the European airline market in the 1990s, there was one striking development. This was the entry of low cost carriers. Starting in summer 1995 with Ryanair there are now almost 50 low cost airlines in Europe which fly on many different routes.¹ These developments dramatically changed the European airline market.² The business strategy of these low cost airlines to save costs is to offer no frills, have fast turn-rounds, use only a single-type fleet of planes, and to fly mainly to cheap secondary airports like Stanstead instead of Heathrow in London ...