Inter-Firm Rivalry: Maximum or Minimum Departure Flight Times Differentiation?

This paper explores the impact of concentration levels on airline flight scheduling behaviors. Airline-level data were collected for each of the five domestic Jeju Island non-stop routes from June 2006 to June 2010. Unlike previous studies on the U.S. airline industry, the present empirical findings suggest that the decrease in concentration (increase in competition) on the Jeju Island routes is associated with smaller inter-firm departure times differentiation. We confirm that the smaller inter-firm differentiation is the driving force of the decline in departure times differentiation with competition. This tendency for less inter-firm differentiation is weaker on the routes with LCCs.In the presence of legacy carriers’ diversified responding strategies on the routes with significant entry of low-cost carriers (LCCs), independent LCCs differentiate their flight services from those of legacy carriers through maximum product differentiation.