Analysis of Airline-in-Airline Strategy and Market Concentration in Europe

The European airline market consists of both full-service and low-cost carriers, with major airline groups like International Airlines Group (IAG), Air France-KLM Group, Lufthansa Group, and Ryanair Group managing multiple subsidiaries to target diverse passenger segments and different regional markets. This project examines how these airline groups and their use of airline-in-airline strategy impact market concentration and competition on intra-European routes, with a focus on the Herfindahl-Hirschman Index (HHI) as a measure of market structure. Key research questions include the comparison of market concentration at national and regional levels, the influence of airline group subsidiaries on overall market share, and the role of airline-in-airline strategy in shaping market concentration on major intra-European routes. Data collected from DIIO and CAPA will be used for analyzing market share by flight capacity on overlapped vs. non-overlapped routes between legacy carriers and their low-cost subsidiaries from 2017 to 2023 covering both pre- and post-pandemic periods. The study aims to reveal how the market structure has evolved due to the formation of airline-in-airlines strategy and the growth of low-cost carriers, providing insights into the competitive dynamics of the European airline industry.