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Hub premiums in European civil aviation

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  • Lijesen, Mark G.
  • Rietveld, Piet
  • Nijkamp, Peter

Abstract

We investigate the practice of carriers that charge higher fares for flights leaving from their hub. We analyze this phenomenon by relating fares to distance, using the main leg of intercontinental flights for scaling purposes. Our results indicate that the practice of a mark up on flights originating from or going to hubs is not typical for the US situation. At least some European carriers charge significant premiums for direct flights from their hubs. We find that at least part of these premiums can be attributed to market power. Policy measures should be aimed at reduction of market power and consumer protection. Furthermore, the existence of hub premiums should be taken into account in regional hub policies.

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  • Lijesen, Mark G. & Rietveld, Piet & Nijkamp, Peter, 2001. "Hub premiums in European civil aviation," Transport Policy, Elsevier, vol. 8(3), pages 193-199, July.
    • Handle: RePEc:eee:trapol:v:8:y:2001:i:3:p:193-199
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    6. Masood Kiarashrad & Seyed Hamid Reza Pasandideh & Mohammad Mohammadi, 2021. "Identifying and prioritizing the essential factors on ticket pricing strategy in a local market based on empirical study: Iranian domestic market," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(1), pages 76-87, February.
    7. Dobruszkes, Frédéric & Wang, Jiaoe, 2019. "Developing a low-cost airline in a semi-protected regime: Comparing China to Europe and the US," Journal of Transport Geography, Elsevier, vol. 77(C), pages 48-58.
    8. Lei, Zheng & Papatheodorou, Andreas, 2010. "Measuring the effect of low-cost carriers on regional airports' commercial revenue," Research in Transportation Economics, Elsevier, vol. 26(1), pages 37-43.
    9. Koen Frenken & Siebren Van Terwisga & Thijs Verburg & Guillaume Burghouwt, 2004. "Airline Competition At European Airports," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 95(2), pages 233-242, April.
    10. Pels, Eric, 2021. "Optimality of the hub-spoke system: A review of the literature, and directions for future research," Transport Policy, Elsevier, vol. 104(C), pages 1-10.
    11. Gerben de Jong & Christiaan Behrens & Hester van Herk & Erik Verhoef, 2019. "Domestic Market Power in the International Airline Industry," Transportation Science, INFORMS, vol. 53(3), pages 796-810, May.
    12. Fu, Qian & Kim, Amy M., 2016. "Supply-and-demand models for exploring relationships between smaller airports and neighboring hub airports in the U.S," Journal of Air Transport Management, Elsevier, vol. 52(C), pages 67-79.
    13. Frédéric Dobruszkes & Jiaoe Wang, 2019. "Developing a low-cost airline in a semi-protected regime: Comparing China to Europe and the US," ULB Institutional Repository 2013/286424, ULB -- Universite Libre de Bruxelles.
    14. Fu, Xiaowen & Homsombat, Winai & Oum, Tae H., 2011. "Airport–airline vertical relationships, their effects and regulatory policy implications," Journal of Air Transport Management, Elsevier, vol. 17(6), pages 347-353.

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