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Recovering Costs by Increasing Market Share: An Empirical Critique of the S-Curve

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  • Kenneth Button
  • Jonathan Drexler

Abstract

An S-shaped curve relating service frequency with market share of passengers is often claimed to explain why airlines seek to increase the frequency of their services. An increase in frequency beyond some point brings about a more than proportional increase in patronage and, indirectly, in revenue. If this is the approach of airlines, however, it may prove counterproductive and instead help to explain the tendency towards excess capacity that is often seen in many airline markets. Looking at a number of major US carriers from 1990 to 2003 and their domestic market shares at several large airports there is very little evidence of the existence of any sustained S-shaped relationship; the general pattern that emerges is of a broadly linear link between frequency and market share. © 2005 LSE and the University of Bath

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  • Kenneth Button & Jonathan Drexler, 2005. "Recovering Costs by Increasing Market Share: An Empirical Critique of the S-Curve," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 391-410, September.
    • Handle: RePEc:tpe:jtecpo:v:39:y:2005:i:3:p:391-410
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    Cited by:

    1. Kuangnen Cheng & Hui-Ping Chen & Jason Lee, 2015. "Competition behavior in service frequency for U.S. airlines," Service Business, Springer;Pan-Pacific Business Association, vol. 9(1), pages 1-16, March.
    2. Pitfield, D.E. & Caves, R.E. & Quddus, M.A., 2010. "Airline strategies for aircraft size and airline frequency with changing demand and competition: A simultaneous-equations approach for traffic on the north Atlantic," Journal of Air Transport Management, Elsevier, vol. 16(3), pages 151-158.
    3. Moshe Givoni & Piet Rietveld, 2006. "Choice of Aircraft Size - Explanations and Implications," Tinbergen Institute Discussion Papers 06-113/3, Tinbergen Institute.
    4. Abdelghany, Ahmed & Abdelghany, Khaled & Azadian, Farshid, 2023. "The airline seat capacity allocation problem: An expected marginal profit approach," Journal of Air Transport Management, Elsevier, vol. 112(C).
    5. Dobruszkes, Frédéric & Dehon, Catherine & Givoni, Moshe, 2014. "Does European high-speed rail affect the current level of air services? An EU-wide analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 461-475.
    6. Vikrant Vaze & Cynthia Barnhart, 2012. "Modeling Airline Frequency Competition for Airport Congestion Mitigation," Transportation Science, INFORMS, vol. 46(4), pages 512-535, November.
    7. Hansen, Mark & Liu, Yi, 2015. "Airline competition and market frequency: A comparison of the s-curve and schedule delay models," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 301-317.
    8. Givoni, Moshe & Rietveld, Piet, 2009. "Airline's choice of aircraft size - Explanations and implications," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(5), pages 500-510, June.
    9. Dong, Xuefan & Liu, Yijung & Wu, Chao & Lian, Ying, 2019. "The topology of scale-free networks with an S-shaped nonlinear growth characteristic," Chaos, Solitons & Fractals, Elsevier, vol. 121(C), pages 137-148.

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