ABSTRACT
This chapter addresses the segmentation of brands and markets as mainline airlines reposition themselves to meet the challenge of low-cost competitors through the creation of subsidiary 'carriers-within-carriers' (CWCs) with lower unit costs than the parent companies. It provides an analysis of the CWC strategy and presents a detailed discussion of the evolution of that strategy across space and through time. The chapter examines a particular manifestation of this more general strategy, one which is of increasing importance as low-cost carriers (LCCs) redefine the parameters of air transport demand in North America, Europe and, now, Asia-Pacific. It describes that CWC strategy is evaluated in terms of the dichotomy between the conceptualization of an airline as an integrated production platform or, conversely, comprising distinct business streams. The entire rationale of the CWC as a response to LCC competition rests on the question of costs.
