Abstract

This article offers an analysis of the competitive framework of European policies for air passengers transport in order to understand the incumbents' reaction to the liberalisation process and to the entrance of low cost companies into the sector. Two theories are analysed: the contestable theory, to understand the theoretical vision that has influenced the liberalisation process, and the core theory, a modern approach to the concept of destructive competition that, according to some authors, is a recurring problem in the sector. The paper examines how the organisational model of low cost companies has helped new entrants to overtake the barriers to the industry. Moreover, a careful analysis of the sector shows that the current competitive framework is not completely connected to the European liberalisation process. And by the same token, the application of the core theory does not seem to justify the alliances that have taken place in these years. The competitive framework is definitely clearer if we analyse these changes in a different way, from the point of view of low cost companies considered as new market actors.