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Determining Hub Efficiency in Europe, the Middle East, and North Africa: The Impact of Geographical Positioning

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  • M. Nenem

    ()

  • E. Ozkan-Gunay

    ()

Abstract

In order to extend beyond their natural home markets, airlines compete to obtain the highest share of transit passenger traffic. Therefore, they focus on their geographical advantage in certain regions in order to attract a maximum number of transfer passengers. This study assesses the geographical attraction of existing and promising hubs in Europe, the Middle East and Northern Africa by employing a Cost of Available Seat per Kilometer (CASK) parameter as the reference point. Seven competing cities (London, Paris, Frankfurt, Dubai, Istanbul, Cairo and Madrid), said to be existing and newly emerging hubs, are compared in terms of cost effectiveness. A model comparing the relative superiorities of these candidate cities over one another is developed based on a sample of 4,080 distinct Origin and Destination (O&D) pairs. The basic results, without the attribution of O&D’s total traffic standings, show that Cairo, Istanbul and Dubai are the three best performing hub candidates, respectively. In absolute numbers, Cairo has the larger advantage over the six other candidate cities. However, when the size of the O&D’s are weighted, the best performing cities are founded to be Istanbul, Frankfurt and Cairo, respectively. In this case, Istanbul is determined to be the most efficient hub for the majority of transit passengers. Despite the downturn in the Aviation Industry in 2009, the growth trend both in Egypt Air and Turkish Airlines is a reflection of these airlines’ recent realization of their potential in hub efficiency. Copyright Eurasia Business and Economics Society 2012

Suggested Citation

  • M. Nenem & E. Ozkan-Gunay, 2012. "Determining Hub Efficiency in Europe, the Middle East, and North Africa: The Impact of Geographical Positioning," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 2(2), pages 37-53, December.
  • Handle: RePEc:spr:eurase:v:2:y:2012:i:2:p:37-53
    DOI: 10.14208/BF03353836
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    References listed on IDEAS

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    1. Flores-Fillol, Ricardo, 2009. "Airline competition and network structure," Transportation Research Part B: Methodological, Elsevier, vol. 43(10), pages 966-983, December.
    2. Kawasaki, Akio, 2008. "Network effects, heterogeneous time value and network formation in the airline market," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 388-403, July.
    3. Teodorovic, Dusan & Kalic, Milica & Pavkovic, Goran, 1994. "The potential for using fuzzy set theory in airline network design," Transportation Research Part B: Methodological, Elsevier, vol. 28(2), pages 103-121, April.
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    Cited by:

    1. Resul Aydemir & Cihad Haytural, 2016. "The effects of low cost carrier entry in the Turkish Airline industry," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 6(1), pages 111-124, April.
    2. Dursun, Mehmet Erkan & O'Connell, John F. & Lei, Zheng & Warnock-Smith, David, 2014. "The transformation of a legacy carrier – A case study of Turkish Airlines," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 106-118.

    More about this item

    Keywords

    Hub Efficiency; Emerging Hubs; Aviation Policy; L9; L93;

    JEL classification:

    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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