We study the entry and exit strategy of low-cost carriers into the Italian aviation market during the early stage of their expansion. We find that their strategy is mainly driven by population size, GDP per capita, tourism vocation of the area, and degree of competition, although the direction and magnitude of these factors change over time. At the beginning, low-cost carriers mostly focus on tourist routes, scantly served by full-service carriers; after 9/11 terrorist attack, they shift to richer destinations; and, when the tourism sector regains momentum, they switch again on leisure routes and also expand their presence on routes operated by full-service carriers. As 9/11 terrorist attack led to a permanent change in the entry and exit strategy of low-cost carriers, our analysis suggests that other global crises, such as the COVID-19 pandemic or the Russia-Ukraine conflict, are bound to provoke significant and long-lasting effects in the low-cost carriers developing strategy.

Entry and exit strategy of low-cost carriers and global crises

Alderighi, Marco;Gaggero, Alberto
2022-01-01

Abstract

We study the entry and exit strategy of low-cost carriers into the Italian aviation market during the early stage of their expansion. We find that their strategy is mainly driven by population size, GDP per capita, tourism vocation of the area, and degree of competition, although the direction and magnitude of these factors change over time. At the beginning, low-cost carriers mostly focus on tourist routes, scantly served by full-service carriers; after 9/11 terrorist attack, they shift to richer destinations; and, when the tourism sector regains momentum, they switch again on leisure routes and also expand their presence on routes operated by full-service carriers. As 9/11 terrorist attack led to a permanent change in the entry and exit strategy of low-cost carriers, our analysis suggests that other global crises, such as the COVID-19 pandemic or the Russia-Ukraine conflict, are bound to provoke significant and long-lasting effects in the low-cost carriers developing strategy.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.14087/9461
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