Structural changes in the Spanish scheduled flights market as a result of air transport deregulation in Europe

Structural changes in the Spanish scheduled flights market as a result of air transport deregulation in Europe

Journal: Air Transport Management

Author: Maria Belen Rey

Published: 2003

Abstract

This paper describes the main changes affecting the structure of the Spanish scheduled flights market and the companies competing within it, during the period 1993–1997. This is a time span that allows us to register the first effects of deregulation. The results reveal that when new private companies from the charter sector came into the open market, pursuing an initial strategy of price reductions, overall competition increased in the Spanish market, and particularly, in the domestic sphere. Secondly, they show that the reaction of the national company, Iberia, to the appearance of new competitors was slow to begin with, although it eventually reacted by lowering fares until on a par with those offered by competing companies. Finally, it is seen that deregulation has led to the consolidation of a competitive environment in the domestic Spanish market, with Iberia currently having less than a 50% market share.

Keywords: Air transport; Deregulation; Market share; Prices

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