Carriers within Carriers: A Strategic Response to Low‐cost Airline Competition

Abstract

This paper addresses the segmentation of brands and markets as mainline airlines reposition themselves to meet the challenge of low‐cost competitors through the creation of subsidiary ‘carriers‐within‐carriers’ (CWCs) with lower unit costs than the parent companies. The paper provides an analysis of the CWC strategy and presents a detailed discussion of the evolution of that strategy across space and through time (as of March 2005). This global survey establishes that legacy carriers have radically divergent responses and attitudes to the CWC strategy and that there is only very limited evidence that it constitutes an effective market response to low‐cost competition.