In the News

Contestable markets - JetBlue to launch NY-UK flights despite pandemic

Geoff Riley

10th August 2021

Can JetBlue succeed where other challengers to the oligopolistic power of BA, Virgin and other leading carriers have failed?

Norwegian Airlines filed for bankruptcy in the autumn of 2020 after sustaining increasingly heavy losses on their direct flights from the UK to the USA.

The collapse of international travel for both leisure and business was probably the final nail in the coffin, but Norwegian Airlines had a tenuous hold on the market.

JetBlue will be cutting costs by using smaller aircraft - can this disruptive challenger make the UK-USA route genuinely more contestable? The airline says there is “strong demand” for the route as the global travel industry recovers. Perhaps they have chosen an opportune moment to test the willingness of fliers to choose a different supplier.

In this revision update video we look at the definition of a contestable market, the conditions required for contestability and then explore some great topical examples to help secure application marks in questions.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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