The development of the competitive position of airlines in the North Atlantic market

Abstract

Despite high growth rates in Asia or the Middle East, the North Atlantic air transport market still is the largest intercontinental air transport market globally. In this battlefield, perceived airline concentration initially seemed to increase in the light of post-9/11 capacity reductions which were followed by mergers, the formation of joint ventures and increasing fuel prices. In the 2010s then, with fuel prices remaining at constantly low levels, one could however observe the inauguration of many new routes, to some extent also driven by new “long haul low cost” business ventures. Against this background, the market positions of airlines on the Europe/North America axis is assumed to have changed over years. The quantification of an airline’s competitive position is, however, not trivial as carriers do not only compete on direct routings but serve many different, direct and indirect, origin-destination (OD) markets with varying degrees of competition. At the end of the day, networks compete against each other, and “traditional”competition assessments at the airport- or direct route-levels will not reflect the whole picture. Fed OD data from Sabre Market Intelligence, this paper applies a modelling approach capable of assessing the individual competitive positions (CP) of airlines at their whole network (OD) level to the transatlantic market. Our results for four selected years between 2002 and 2016 indicate sometimes volatile, but generally decreasing CPs in the long run, as well as higher CPs for geographically specialized airlines and for dedicated leisure carriers.