The effect of LCC market entry on dominant FSC's price into long haul sector: A case of Norwegian competition on British Airways' prices on selected transatlantic routes

The concept of long-haul low-cost operations has become somewhat appealing in the airline industry recent years. In Europe, rapid expansion carrier Norwegian that entered markets from several large metropolises (London, Paris, Barcelona, etc.) imposed a burden challenges to full-service carriers (FSCs). However, operates portion its service London Gatwick by offering flights mainly on high-density routes. Although Norwegian's capacity and market shares these routes are still at low level due carrier's “puppy-dog” strategy, it seems effect British Airways, dominant markets, cannot be ignored. purpose research is examine extent which presence affects prices charged Airways three selected transatlantic performed area. model applies simultaneous equation systems determine how emergence price passenger volume as traditionally carrier, city-pair markets. findings consistent with well-established view held literature, LCC's specific would generally affect incumbents reduce their prices. Indeed, announced counter-strategy mitigate competitive pressure induced affordable service.