Airline Pricing Behaviour in the Russian Air Transportation Market in the Presence of the Low-cost Airline

Student: Kobzeva Olga

Faculty: International College of Economics and Finance

Educational Programme: Double degree programme in Economics of the NRU HSE and the University of London (Bachelor)

Year of Graduation: 2019

Abstract In 2004 a low-cost carrier Pobeda was established. It is the first discount airline in Russia that operates successfully for four years. The thesis attempts to answer the question whether there exist the evident signs of competitive behaviour between the low-cost carrier and traditional airlines operating in the Russian air transportation market. Three-months period observation of the minimum fares proposed by each airline on three routes for two dates allowed to build an econometric model to estimate whether the airlines respond to each other’s fare movements. The results show that Pobeda tends to follow fare fluctuations of S7 Airlines only, however, the initial propositions were rejecting such outcome.

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