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Technological innovation in the airline industry: The impact of regional jets

  • Brueckner, Jan K.
  • Pai, Vivek

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 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 point-to-point (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. Additional descriptive evidence shows that RJs were used to provide service on a large number of new hub-and-spoke (HS) routes, and that they replaced discontinued jet and turboprop service on many such routes, as well as supplementing continuing jet service. When replacement or supplementation by RJs occurred, passengers benefited from better service quality via higher flight frequencies.

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File URL: http://www.sciencedirect.com/science/article/B6V8P-4SSY8R7-1/2/ab62899e0d9e57479e26bae812547050
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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 27 (2009)
Issue (Month): 1 (January)
Pages: 110-120

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Handle: RePEc:eee:indorg:v:27:y:2009:i:1:p:110-120
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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  1. Jan K. Brueckner, 2004. "Network Structure and Airline Scheduling," Journal of Industrial Economics, Wiley Blackwell, vol. 52(2), pages 291-312, 06.
  2. 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.
  3. 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.
  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. Berry, Steven & Reiss, Peter, 2007. "Empirical Models of Entry and Market Structure," Handbook of Industrial Organization, Elsevier.
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