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The impact of low-cost carriers on hybrid carriers: The case of the Australian domestic market
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DOI：10.1016/j.rtbm.2025.101499.png)
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Abstract
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COVID-19 forced Virgin from a full-service carrier to emerge as a hybrid carrier. This study analyzes booking fare data from four major domestic routes in Australia to understand the pricing influence of low-cost carriers on hybrid carriers. Findings indicate that Virgin maintains fare levels between Qantas and Jetstar, with fares aligning more closely with Jetstar over long booking periods (28 days and 60 days before departure). Empirical results reveal that Virgin adopts a limited price-following strategy in response to Jetstar's fare adjustments. Specifically, during long booking periods, Virgin's fares exhibit a significant co-movement response when Jetstar adjusts its fares but show weak and statistically insignificant responses during short booking periods (1–21 days before departure). Given the steady growth in market share for both Virgin and Jetstar, more complex competitive patterns are likely to emerge in the future.
Keywords:
Virgin
Jetstar
pricing strategy
hybrid carrier
low-cost carrier
co-movement response
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