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Network Structure and Airline Scheduling

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Author Info
Brueckner, Jan K. (U of Illinois at Urbana-Champaign)
Abstract

This paper provides a simple analysis of the effects of network structure on the scheduling, traffic, and aircraft-size choices of a monopoly airline. The analysis shows that switching to an HS network leads to increases in both flight frequency and aircraft size, while stimulating local traffic in and out of the hub. In addition, HS networks are shown to be preferred by the airline when travel demand is low, when flights are expensive to operate, and when passengers place a high value on flight frequency but are not excessively inconvenienced by the extra travel time required for a connecting trip. The welfare analysis shows that the flight frequency, traffic volumes, and aircraft size chosen by the monopolist are all inefficiently low under both network types. Moreover, in the most plausible case, the monopolist's network choice exhibits an inefficient bias toward the HS network, apparently reflecting an excessive desire to economize on the number of flights.

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Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 02-0112.

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Date of creation: May 2002
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Handle: RePEc:ecl:illbus:02-0112

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Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp
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  1. Brueckner, Jan K. & Spiller, Pablo T., 1991. "Competition and mergers in airline networks," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 323-342, September. [Downloadable!] (restricted)
  2. Youdi Schipper & Piet Rietveld & Peter Nijkamp, 1998. "Deregulation and Schedule Competition in Simple Airline Networks," ERSA conference papers ersa98p205, European Regional Science Association. [Downloadable!]
  3. Youdi Schipper & Peter Nijkamp & Piet Rietveld, 1998. "Frequency Equilibria in Duopoly Airline Markets," Tinbergen Institute Discussion Papers 98-080/3, Tinbergen Institute.
  4. Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2000. "A note on the optimality of airline networks," Economics Letters, Elsevier, vol. 69(3), pages 429-434, December. [Downloadable!] (restricted)
  5. Jan K. Brueckner & Nichola J. Dyer & Pablo T. Spiller, 1992. "Fare Determination in Airline Hub-and-Spoke Networks," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 309-333, Autumn. [Downloadable!] (restricted)
  6. Eric Pels & Peter Nijkamp & Piet Rietveld, 1997. "Substitution and Complementarity in Aviation: Airports vs. Airlines," Tinbergen Institute Discussion Papers 97-097/3, Tinbergen Institute.
  7. Panzar, John C, 1979. "Equilibrium and Welfare in Unregulated Airline Markets," American Economic Review, American Economic Association, vol. 69(2), pages 92-95, May. [Downloadable!] (restricted)
  8. Brueckner, Jan K., 2001. "The economics of international codesharing: an analysis of airline alliances," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1475-1498, December. [Downloadable!] (restricted)
  9. Hendricks, Ken & Piccione, Michele & Tan, Guofu, 1995. "The Economics of Hubs: The Case of Monopoly," Review of Economic Studies, Blackwell Publishing, vol. 62(1), pages 83-99, January. [Downloadable!] (restricted)
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  10. Brueckner, Jan K & Spiller, Pablo T, 1994. "Economies of Traffic Density in the Deregulated Airline Industry," Journal of Law & Economics, University of Chicago Press, vol. 37(2), pages 379-415, October.
  11. Tae Hoon Oum & Anming Zhang & Yimin Zhang, 1995. "Airline Network Rivalry," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 836-57, November.
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