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Technology, Business Models and Network Structure in the Airline Industry

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Author Info

  • Xavier Fageda

    ()
    (Department of Economic Policy, Universitat de Barcelona, Avinguda Diagonal 690, 08034 Barcelona, Spain.)

  • Ricardo Flores-Fillol

    (Department of Economics, Universitat Rovira i Virgili, Avinguda de la Universitat 1, 43204 Reus, Spain.)

Abstract

Network airlines have been increasingly focusing their operations on hub airports through the exploitation of connecting traffic, allowing them to take advantage of economies of traffic density, which are unequivocal in the airline industry. Less attention has been devoted to airlines? decisions on point-to-point thin routes, which could be served using different aircraft technologies and different business models. This paper examines, both theoretically and empirically, the impact on airlines ?networks of the two major innovations in the airline industry in the last two decades: the regional jet technology and the low-cost business model. We show that, under certain circumstances, direct services on point-to-point thin routes can be viable and thus airlines may be interested in deviating passengers out of the hub.

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File URL: http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP2010-14.pdf
File Function: First version, 2010
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File URL: http://www.pcb.ub.es/xreap/aplicacio/fitxers/XREAP2010-14.pdf
File Function: Revised version, 2010
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Bibliographic Info

Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number XREAP2010-14.

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Length: 54 pages
Date of creation: Dec 2010
Date of revision: Dec 2010
Handle: RePEc:xrp:wpaper:xreap2010-14

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Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques i Empresarials, Universitat de Barcelona, c/ Tinent Coronel Valenzuela, 1-11, 08034 Barcelona
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Web page: http://www.pcb.ub.edu/xreap
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Related research

Keywords: regional jet technology; low-cost business model; point-to-point network; hub-and-spoke network;

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References

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  1. Flores-Fillol, Ricardo, 2010. "Congested hubs," Transportation Research Part B: Methodological, Elsevier, vol. 44(3), pages 358-370, March.
  2. Flores-Fillol, Ricardo, 2009. "Airline competition and network structure," Transportation Research Part B: Methodological, Elsevier, vol. 43(10), pages 966-983, December.
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Cited by:
  1. Veruska Oppedisano & Gilberto Turati, 2010. "What are the causes of educational inequalities and of their evolution over time in Europe? Evidence from PISA," Working Papers XREAP2010-16, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2010.
  2. Lluís Bermúdez & Antoni Ferri & Montserrat Guillén, 2011. "A correlation sensitivity analysis of non-life underwriting risk in solvency capital requirement estimation," Working Papers XREAP2011-12, Xarxa de Referència en Economia Aplicada (XREAP), revised Sep 2011.

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