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A Framework for Modeling "Real-Life" Airline Networks

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  • Bilotkach Volodymyr

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

Abstract

This paper develops a new model, which allows for the co-existence of hub-and-spoke and point-to-point networks in the airline industry. Passengers are segmented between the non-stop and one-stop services. In the baseline model, the monopoly airlines ability to segment the market and effectively set up the mixed network depends on the cost savings due to the through-hub service relative to exogenous quality difference between the one-stop and non-stop flights. Socially inefficient entry with the new non-stop service where an incumbent is operating the hub-and-spoke network is possible.

Suggested Citation

  • Bilotkach Volodymyr, 2009. "A Framework for Modeling "Real-Life" Airline Networks," Review of Network Economics, De Gruyter, vol. 8(3), pages 1-16, September.
  • Handle: RePEc:bpj:rneart:v:8:y:2009:i:3:n:3
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    Cited by:

    1. Bilotkach, Volodymyr & Fageda, Xavier & Flores-Fillol, Ricardo, 2010. "Scheduled service versus personal transportation: The role of distance," Regional Science and Urban Economics, Elsevier, vol. 40(1), pages 60-72, January.
    2. Fageda, Xavier, 1975- & Flores-Fillol, Ricardo, 2012. "Airport Congestion and Airline Network Structure," Working Papers 2072/211753, Universitat Rovira i Virgili, Department of Economics.

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