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Recovering Costs by Increasing Market Share: An Empirical Critique of the S-Curve

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  • Kenneth Button
  • Jonathan Drexler
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    Abstract

    An S-shaped curve relating service frequency with market share of passengers is often claimed to explain why airlines seek to increase the frequency of their services. An increase in frequency beyond some point brings about a more than proportional increase in patronage and, indirectly, in revenue. If this is the approach of airlines, however, it may prove counterproductive and instead help to explain the tendency towards excess capacity that is often seen in many airline markets. Looking at a number of major US carriers from 1990 to 2003 and their domestic market shares at several large airports there is very little evidence of the existence of any sustained S-shaped relationship; the general pattern that emerges is of a broadly linear link between frequency and market share. © 2005 LSE and the University of Bath

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    Bibliographic Info

    Article provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.

    Volume (Year): 39 (2005)
    Issue (Month): 3 (September)
    Pages: 391-410

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    Handle: RePEc:tpe:jtecpo:v:39:y:2005:i:3:p:391-410

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    Web page: http://www.bath.ac.uk/e-journals/jtep

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    Cited by:
    1. Moshe Givoni & Piet Rietveld, 2006. "Choice of Aircraft Size - Explanations and Implications," Tinbergen Institute Discussion Papers 06-113/3, Tinbergen Institute.
    2. Givoni, Moshe & Rietveld, Piet, 2009. "Airline's choice of aircraft size - Explanations and implications," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(5), pages 500-510, June.
    3. Moshe Givoni & Piet Rietveld, 2006. "Choice of Aircraft Size - Explanations and Implications," Tinbergen Institute Discussion Papers 06-113/3, Tinbergen Institute.
    4. Pitfield, D.E. & Caves, R.E. & Quddus, M.A., 2010. "Airline strategies for aircraft size and airline frequency with changing demand and competition: A simultaneous-equations approach for traffic on the north Atlantic," Journal of Air Transport Management, Elsevier, vol. 16(3), pages 151-158.

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