Airline network structure under demand uncertainty
AbstractIn 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 InfoArticle provided by Elsevier in its journal Transportation Research Part E: Logistics and Transportation Review.
Volume (Year): 36 (2000)
Issue (Month): 3 (September)
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