Modelling Heterogeneous Capacity Response Strategies of Airlines in the Initial Stage of the COVID-19 Pandemic in the EU-US Market

Liwen Wang; Xiaowei Tang; Shengrun Zhang; Frank Witlox

doi:10.59490/ejtir.2025.25.4.7753

Modelling Heterogeneous Capacity Response Strategies of Airlines in the Initial Stage of the COVID-19 Pandemic in the EU-US Market

Authors

Liwen Wang Department of Geography, Ghent University, Belgium | College of Civil Aviation, Nanjing University of Aeronautics and Astronautics, China https://orcid.org/0009-0002-5962-3459
Xiaowei Tang College of Civil Aviation, Nanjing University of Aeronautics and Astronautics, China https://orcid.org/0000-0002-0906-6351
Shengrun Zhang College of Civil Aviation, Nanjing University of Aeronautics and Astronautics, China https://orcid.org/0000-0001-9040-2983
Frank Witlox Department of Geography, Ghent University, Belgium | College of Civil Aviation, Nanjing University of Aeronautics and Astronautics, China | Department of Geography, University of Tartu, Estonia https://orcid.org/0000-0002-8966-6823

DOI:

https://doi.org/10.59490/ejtir.2025.25.4.7753

Keywords:

EU-US market, COVID-19 crisis, Response strategy, Difference-in-differences

Abstract

This paper investigates the causal impact of the initial stage of the COVID-19 pandemic (i.e., 2020) on airlines’ crisis response strategies from the supply perspective in the EU-US market. An analytical framework examining three strategies, namely market exit, capacity retrenchment, and route hierarchy persevering, is established by utilizing the difference-in-differences (DID) method, which jointly considers dynamics in pandemic severity, border control policies, and route structure. The results demonstrate that the COVID-19 pandemic led to the disappearance of diversity in the business models of the EU-US market in the short term. Analysis of individual airlines’ capacity retrenchment strategies reveals heterogeneity in the impact of COVID-19. The route hierarchy persevering analysis exhibits three distinct strategies of airlines, i.e., connectivity-oriented, antitrust immunity joint venture-oriented, and market presence-oriented.

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