Strategic Behavior of European Low-Cost Airlines: A Review and Economic Analysis

Abstract

The remarkable evolution of low-cost carriers (LCC's) in Europe has been subject to intensive discussions in recent years. Approaching industry maturity has revealed strategic errors among many airlines and caused several markets to exit. Various carriers have ended up in hybrid positions while trying to differentiate in order to remain competitive. This paper occupies with the role of strategies in the airline industry and assesses the level of deviation from the original low-cost model amongst European LCC's. Synthesizing existing research and literature provides evidence that LCC's adapting full-service network carrier characteristics perform worse than strict low-cost adherers.