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Technological Innovation in the Airline Industry: The Impact of Regional Jets

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Author Info

  • Jan K. Brueckner

    ()
    (Department of Economics, University of California-Irvine)

  • Vivek Pai

    ()
    (Department of Economics, University of California-Irvine)

Abstract

This paper explores the impact of the regional jet (RJ), an important new technological innovation in the airline industry, on service patterns and service quality. The evidence shows that RJs were used to provide service on a large number of new hub-and-spoke (HS) and point-to-point (PP) routes. In addition, they replaced discontinued jet and turboprop service on many HS routes, as well as supplementing continuing jet service on such routes. When replacement or supplementation by RJs occurred, passengers benefited from better service quality via higher flight frequencies. The paper's theoretical analysis predicts that the frequency advantage of RJs over jets, a consequence of their small size, should have led to the emergence of PP service in thin markets where such service was previously uneconomical. However, the evidence contradicts this prediction, showing that markets attracting new PP service by RJs had demographic characteristics similar to those of markets that already had jet PP service or attracted it after 1996.

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File URL: http://www.economics.uci.edu/files/economics/docs/workingpapers/2006-07/Brueckner-20.pdf
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Bibliographic Info

Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 060720.

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Length: 37 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:irv:wpaper:060720

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Keywords: Regional jet; Airlines; Network;

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References

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  1. Dresner, Martin & Windle, Robert & Zhou, Ming, 2002. "Regional jet services: supply and demand," Journal of Air Transport Management, Elsevier, vol. 8(5), pages 267-273.
  2. Berry, Steven & Reiss, Peter, 2007. "Empirical Models of Entry and Market Structure," Handbook of Industrial Organization, Elsevier.
  3. Brueckner, Jan K., 2002. "Network Structure and Airline Scheduling," Working Papers 02-0112, University of Illinois at Urbana-Champaign, College of Business.
  4. Curtis Eaton, B. & Lipsey, Richard G., 1989. "Product differentiation," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 12, pages 723-768 Elsevier.
  5. Babikian, Raffi & Lukachko, Stephen P. & Waitz, Ian A., 2002. "The historical fuel efficiency characteristics of regional aircraft from technological, operational, and cost perspectives," Journal of Air Transport Management, Elsevier, vol. 8(6), pages 389-400.
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Citations

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Cited by:
  1. Fukui, Hideki, 2012. "Do carriers abuse the slot system to inhibit airport capacity usage? Evidence from the US experience," Journal of Air Transport Management, Elsevier, vol. 24(C), pages 1-6.
  2. Fageda, Xavier & Flores-Fillol, Ricardo, 2011. "Air services on thin routes: Regional versus low-cost airlines," Working Papers 2072/179624, Universitat Rovira i Virgili, Department of Economics.
  3. Martini, Gianmaria & Manello, Alessandro & Scotti, Davide, 2013. "The influence of fleet mix, ownership and LCCs on airports’ technical/environmental efficiency," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 50(C), pages 37-52.
  4. Chen, Yongmin & Gayle, Philip, 2013. "Mergers and Product Quality: Evidence from the Airline Industry," MPRA Paper 51238, University Library of Munich, Germany.
  5. Cohen, Maurie J., 2010. "Destination unknown: Pursuing sustainable mobility in the face of rival societal aspirations," Research Policy, Elsevier, vol. 39(4), pages 459-470, May.
  6. Fageda, Xavier & Flores-Fillol, Ricardo, 2012. "Air services on thin routes: Regional versus low-cost airlines," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 702-714.
  7. Joan Calzada & Xavier Fageda, 2012. "Discounts and Public Service Obligations in the Airline Market: Lessons from Spain," Review of Industrial Organization, Springer, vol. 40(4), pages 291-312, June.
  8. Pai, Vivek, 2010. "On the factors that affect airline flight frequency and aircraft size," Journal of Air Transport Management, Elsevier, vol. 16(4), pages 169-177.
  9. Fageda, Xavier, 1975- & Flores-Fillol, Ricardo, 2010. "Technology, business models and network structure in the airline industry," Working Papers 2072/151552, Universitat Rovira i Virgili, Department of Economics.
  10. Fageda, Xavier & Flores-Fillol, Ricardo, 2012. "On the optimal distribution of traffic of network airlines," European Economic Review, Elsevier, vol. 56(6), pages 1164-1179.
  11. Vivek Pai, 2007. "On the Factors that Affect Airline Flight Frequency and Aircraft Size," Working Papers 070803, University of California-Irvine, Department of Economics.
  12. Martini, Gianmaria & Scotti, Davide, 2010. "Potere di mercato e distribuzione dei profitti nella filiera del trasporto aereo
    [Market power and profits distribution in the air transportation vertical channel]
    ," MPRA Paper 24647, University Library of Munich, Germany.

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