Marketing strategy of the subsidiary LCCs and its effects for market competition

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We analyzed networking strategies of the subsidiary LCC (low cost carrier) by the case study of Jetstar Airways. Qantas Airways countered the independent LCC, Virgin Australia by establishing its subsidiary LCC, Jetstar in 2004.Jetstar is the most successful subsidiary LCC of the full service airline (FSA) while many FSAs failed to operate their subsidiary LCCs.We conducted descriptive and econometric approaches to examine the effects of Jetstar's entry on competition structure using data from 2004 to 2012. We found that entry by Jetstar was mainly aimed at competing against Virgin but it also induced side effects which promoted cannibalizations between Qantas and Jetstar. However, Jetstar seems to be trying to relax competition with Qantas by the careful arrangement of flight scheduling.