Econometric analysis shows lower prices and higher passenger counts from low-cost carriers, indicating consumer benefits.
The entry of a low cost carrier onto a route leads to lower prices and higher passenger counts, both on other routes at the same airport and on competing routes at neighbouring airports. These effects indicate that consumer gains from the entry of low cost carriers are higher than previously estimated. A case study and an econometric analysis are used to estimate these effects.
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Dresner et al. (1996) studied this question.
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