The effects of low cost carrier entry in the Turkish Airline industry

Abstract

The paper examines the impact of low-cost carrier Pegasus Airlines’ entry on Turkish Airlines’ yields in domestic and international routes. We find that Turkish Airlines’ yields are lower in both types of routes in response to entry. Moreover, the LCC entry affects domestic routes substantially more than international routes. Due to lower fares and heightened competition, the number of passengers has more than quadrupled in the last decade. Hence, we argue that Pegasus entry has been instrumental in transforming the Turkish Airline industry, which has become more dynamically competitive recently.