TAP

: facing the low-cost competition

Abstract

TAP, the Portuguese national airline was founded in 1945, and since then it has been the predominant airline operating in the Portuguese market. It offers short, medium and long-haul routes mainly focusing on the European, South American and African territories. However, in recent years it has been losing market share in the short-haul segment to low-cost carriers, who continue to penetrate and grow in the Portuguese market. Due to the liberalization of the European airline market in 1997, TAP, and the other established airlines at that time, saw major changes in the industry. Within a few years, several low-cost carriers (LCCs) were able to enter the market and reach leadership positions. Given the current threat that low-cost carriers pose to TAP, the company has to make a strategic decision on how to adapt to this kind of competition and how to best react to LCCs. Should it focus its strategy on differentiating, thus offering a value proposition that is worth paying a premium for? Or should the company restructure the business and compete with the low-cost airlines on price terms? This case study analyses the competition between LCCs and full-service carriers (FSCs) in Europe, by explaining the differences between the two business models, and the strategies full-service carriers have followed. The objective of the case is to allow the reader to make an informed decision regarding the general strategy TAP should choose when competing against LCCs.

Date of Award	2015
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	João Simão Pires (Supervisor)