Much ado about nothing? Perceptions of the Air Berlin bankruptcy on airline competition in Germany, Austria and Switzerland

Abstract

In Europe’s airline industry, the market exit of one of its largest industry players, the Air Berlin Group, has led to significant changes in the level of competition within the DACH-region (Germany, Austria and Switzerland). Existing research, however, is limited to provide insights into the short- and long-term im-plications of such market changes on the level of competition, particularly on price and quality. In response, this paper investigates how the bankruptcy of Air Berlin influences the level of price and quality airlines are offering to its passengers. Using a qualitative approach, airline-related professional and experts have been interviewed about their perception of the levels of quality, price and competition. The findings show that the Air Berlin bankruptcy resulted in a shortage of capacity on the market leading to increasing prices and short-term competition is likely to increase as various airlines try to replace Air Berlin on the market. However, in the long term, prices for airline tickets are expected to bounce back to a similar level like before the Air Berlin bankruptcy, as more competitors will penetrate the market, which leads to a more challenging market environment. In terms of quality, it was found that other Low-Cost Carriers (LCCs) offered similar products compared to Air Berlin, thus no or only minor changes in quality are expected.