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Airline network structure under demand uncertainty

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  • Barla, Philippe
  • Constantatos, Christos

Abstract

In this paper, we provide another reason that may explain the adoption of the hub-and-spoke network structure in the airline industry. We show that when an airline has to decide on its capacity before the demand conditions are perfectly known, a hub-and-spoke (h&s) network structure by pooling passengers from several markets into the same plane helps the firm to lower its cost of excess capacity in the case of low demand and to improve its capacity allocation in the case of high demand.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part E: Logistics and Transportation Review.

Volume (Year): 36 (2000)
Issue (Month): 3 (September)
Pages: 173-180

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Handle: RePEc:eee:transe:v:36:y:2000:i:3:p:173-180

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Cited by:
  1. Rafael Moner Colonques & Ricardo Flores Fillol, 2006. "Strategic Effects Of Airline Alliances," Working Papers. Serie AD 2006-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  2. A. Mantovani & O. Tarola, 2006. "Did the entry of low cost companies foster the growth of strategic alliances in the airline industry?," Working Papers 574, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Rafael Moner Colonques & Ricardo Flores Fillol, 2005. "Strategic Effects Of International Airline Alliances," Working Papers. Serie AD 2005-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  4. Adler, Nicole & Hashai, Niron, 2005. "Effect of open skies in the Middle East region," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(10), pages 878-894, December.
  5. Barla, Philippe & Constantatos, Christos, 2005. "Strategic interactions and airline network morphology under demand uncertainty," European Economic Review, Elsevier, vol. 49(3), pages 703-716, April.
  6. Adler, Nicole & Smilowitz, Karen, 2007. "Hub-and-spoke network alliances and mergers: Price-location competition in the airline industry," Transportation Research Part B: Methodological, Elsevier, vol. 41(4), pages 394-409, May.
  7. Barla, Philippe & Constantatos, Christos, 2005. "On the Choice between Strategic Alliance and Merger in the Airline Sector: the Role of Strategic Effects," Cahiers de recherche 0502, Université Laval - Département d'économique.

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