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Airline Market Entry And Alliance Strategies

Posted on:2021-02-08Degree:DoctorType:Dissertation
Country:ChinaCandidate:L TengFull Text:PDF
GTID:1362330614472277Subject:Management Science and Engineering
Abstract/Summary:
Air transport industry has been deregulated since late 1970 s,with the deepening of economic globalization,the competition in airlines gradually transformed from individual airline to grand airline alliances.Global air transport market once had almost been occupied by three grand airline alliances.However,in recent years,several members of alliances exit while newcomers has been lesser.EU/US Open Skies Agreement and China-ASEAN Open Skies Agreements were repectively signed in 2007 and 2015,resulting in the liberalization of air transport.Rapid development of air transport industry has aggravated human induced greenhouse effect.EU-Emission Trading Scheme(EUETS)for aviation introduced in 2012 and Carbon Offsetting and Reduction Scheme for International Aviation(CORSIA)agreed at International Civil Aviation Organization(ICAO)in 2016 to eliminate the carbon emission from air industry.Based on the background above,the dissertation takes market entry and alliance strategies of airlines as the breakthrough points of competition and cooperation in air transport industry.On the basis of analysis and induction of related literature,three strategies including product differentiation strategy,product proliferation strategy and alliance strategy are adopted.The decision model,pricing,and profit of the airlines are analyzed to provide theoretical basis for airlines,supporting for policy makers to promote related policy implementation,and offer proposals for the orderly development of aviation industry.First,market entry of low cost carrier considering the restriction of airport capacity.Low cost carrier as a potential entrant of the market offers vertically differentiation transport service to entry the maket initially operated by full service carrer.Full service carrier acts as the incumbent to deter the entry of low cost carrier.Cournot model is built to analyze the question.The results of the research shows that if the runway capacity is large enough,entry of low cost carrier could not be blocked or deterred;if the runway capacity is too much small,it is hardly possible for low cost carrier to enter.The discussion of the problem applies more interpretation of historical priority rule in the flight slot management,which results in deterring the potential competition especially from low cost carriers.The results put forward development suggestions for low cost carriers,and provides reference for policy makers to pomote runway upgrading investment and encourage the development of low cost carriers.Second,entry deterrence of airlines with low carbon investment considering product proliferation strategy.An airline supplying regular transport service products faced with entry threat of a potential entrant that masters low carbon techniques,the incumbent adopts product proliferation strategy to deter the entry.Hotelling-Cournot model is modeled to analyze possible outcomes of the market,concluding that if the category number exeeds critical value,entry of new entrant would be deterred.Once entry is accommodated,airline with low carbon investment would raise the degree of low carbon abatement to compete with the incumbent or even makes the incumbent leave the market.The discusson of the question could suppy reference for airlines with product differentiation and product proliferation to deal with market entry or deterrence,and also provide ideals for sustainable development of aviation industry.Third,market entry under EU-ETS considering incumbents alliance strategy.In the background of EU-ETS,incumbents could deter the potential entry by alliance strategy.The influence factors considered include incumbents’ decision-making mode,service quantity supplied,entry cost and benchmark allocation of emission permits in ETS.The conditions of entry blockade,deterrence and accomodation under separate and alliance decision of incumbents are obtained and compared to conclude when incumbents have motivation to implement allied decision.The results of the research provide references for market entry strategies of airlines in the context of EU-ETS,and also give suggestions for policy makes on how to balance the relationship between carbon abatement target and market expand in air transport market.Fourth,bargaining strategy of airlines cooperative code share.When market airlines implement code share agreement with the same operating airline,marketing airlines could cooperate to bargain with the operating airline on transfer price.Distingushed by the relationship between the members of marketing airline alliance,two cooperative bargaining strategies are adopted — leader based cooperative bargaining and entrusted agent cooperative bargaining.Leader based cooperative bargaining has two sub strategies accroding to whether there is internal negotiation inside the marketing airline alliance.The outcome of different strategies are compared,providing theoretical support to decision making for code share pricing.
Keywords/Search Tags:airlines, market entry, entry deterrence, airline alliance, carbon abatement
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