Portal de Periódicos da CAPES

THE IMPACT OF DISCOUNT AIRLINES ON DOMESTIC FARES IN CANADA

2000; Penn State University Press; Volume: 39; Issue: 4 Linguagem: Inglês

2157-328X

Marc S. Mentzer,

Transport and Economic Policies

The oligopolistic tendencies of the airline industry are even more pronounced in Canada than in the U.S.; indeed, in the late 1990s, only 2 airlines--Air Canada and Canadian Airlines--account for about 80% of industry operating revenues according to the government ministry for transportation. In the face of such extreme market concentration, it might be expected that low-fare carriers would be especially important in suppressing fares of the major airlines. However, the impact of low-fare carriers in the Canadian context has not been tested empirically. The aim of this article is to determine whether the presence of a low-fare carrier on a domestic Canadian route suppresses the fares of the major airlines. Background material is first provided, followed by a regression analysis applied to data on 163 city-pairs within Canada to identify the effect, if any, of low-fare carriers on major airline fares. Lastly, the implications for public policy are briefly discussed.