The Impact of Gulf Carrier Competition on U.S. Airlines

Dresner, Martin, Cunyet Eroglu, Christian Hofer, Fabio Mendez, and Kerry Tan (2015)."The Impact of Gulf Carrier Competition on U.S. Airlines," Transportation Research Part A: Policy and Practice 79, 31-41.

Northeastern U. D’Amore-McKim School of Business Research Paper No. 2637334

23 Pages Posted: 30 Jul 2015 Last revised: 25 Sep 2015

See all articles by Martin E. Dresner

Martin E. Dresner

University of Maryland

Cuneyt Eroglu

Northeastern University - Management Information Systems Area

Christian Hofer

University of Arkansas

Fabio Mendez

University of Arkansas - Sam M. Walton College of Business

Kerry M. Tan

Loyola University Maryland

Date Written: December 16, 2014

Abstract

Gulf carriers, such as Emirates Airline, Etihad Airways, and Qatar Airways, have expanded aggressively and are creating an increasingly dense global network. These carriers' future growth prospects, however, hinge on their ability to gain access to lucrative markets in Europe and America, for example. Existing bilateral agreements stifle the Gulf carriers' ambitious expansion plans in some instances, and incumbent carriers lobby to restrict further market access. To contribute to this debate, the objective of this research is to empirically examine the effects of Gulf carrier competition on U.S. carriers' passenger volumes and fares in international route markets. Based on data obtained from the U.S. Department of Transportation, the empirical results suggest that greater competition by Gulf carriers in U.S. international markets is associated with 1) significant growth in U.S.-Middle East traffic volumes and 2) small but statistically significant traffic losses and fare reductions for U.S. carriers in route markets connecting the U.S. with Africa, Asia, Australia and Europe.

Keywords: Gulf carriers, Competition, Air fares, Passenger traffic

JEL Classification: L93, L13

Suggested Citation

Dresner, Martin E. and Eroglu, Cuneyt and Hofer, Christian and Mendez, Fabio and Tan, Kerry M., The Impact of Gulf Carrier Competition on U.S. Airlines (December 16, 2014). Dresner, Martin, Cunyet Eroglu, Christian Hofer, Fabio Mendez, and Kerry Tan (2015)."The Impact of Gulf Carrier Competition on U.S. Airlines," Transportation Research Part A: Policy and Practice 79, 31-41.; Northeastern U. D’Amore-McKim School of Business Research Paper No. 2637334. Available at SSRN: https://ssrn.com/abstract=2637334

Martin E. Dresner

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Cuneyt Eroglu

Northeastern University - Management Information Systems Area ( email )

Boston, MA 02115
United States

Christian Hofer (Contact Author)

University of Arkansas ( email )

Fayetteville, AR 72701
United States

Fabio Mendez

University of Arkansas - Sam M. Walton College of Business ( email )

Fayetteville, AR 72701
United States

Kerry M. Tan

Loyola University Maryland ( email )

4501 N. Charles Street
Sellinger Hall 321
Baltimore, MD 21210
United States
(410)617-2460 (Phone)

HOME PAGE: http://evergreen.loyola.edu/kmtan/www/

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