The Impact of Geographic Scale and Traffic Density of Airline Production Costs
The Decline of the No-Frills Airlines
Bibliographic Data
| ID | 4784083 |
|---|---|
| Authors | Neil Sorenson (corresponding author) |
| Year | 1991 |
| Volume | 67 |
| Issue | 4 |
| Pages | 333 |
| Publication date | 1991-10-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economic Geography (JOURNAL) |
| Journal identifiers | ISSN: 0013-0095 • E-ISSN: 1944-8287 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/143977 |
| OpenAlex | W2058365440 |
| Language | EN |
| Citations received | 8 |
The general decline in numbers of low-fare, no-frills airlines that has occurred since their entry into the industry following deregulation suggests that airlines that attempt to compete by lowering operating costs are highly vulnerable to competitive maneuvering. The difficulty with a low-cost cost-leadership strategy in the airline industry is that market position is unprotected by barriers associated with economies of scale. In other industries, scale economies create barriers by presenting potential entrants with a choice of either entering after making a huge investment in scale facilities or accepting a decidedly inferior market position. In the airlines, scale economies are virtually nonexistent. Cost reduction is best achieved either through density economies associated with high capacity in the airline's markets or by reducing the price paid for the elements of production. Because these methods do not create substantial barriers, a cost leader must look for supplemental strategic approaches, completely shift strategic emphasis, or face the prospect of going out of business. Since the airlines were deregulated in 1978, a number of firms have either entered the industry or expanded beyond state boundaries to compete on a larger scale. Many of them began with the stated
Aviation · Business · Cartography · Economic geography · Economics · Geography · Microeconomics · Production (economics) · Scale (ratio) · Air Traffic Management and Optimization · Aviation Industry Analysis and Trends · Engineering · Transportation Planning and Optimization
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From Podes to Antipodes
| Unique citing works | 8 |
|---|---|
| Citations per year | 0,24 |
| Citation span | 1993 - 2016 (24) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 6 |