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U.S. air passenger service: a taxonomy of route networks, hub locations, and competition

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Listed:
  • Neil Bania
  • Paul W. Bauer
  • Thomas J. Zlatoper

Abstract

In this paper, we analyze the service provided by the 13 largest U.S. passenger airlines to the 100 most populous U.S. metropolitan areas in 1989. We classify the route systems by their nature and geographical extent using a variety of measures based on route-level data. We then identify individual airline hub locations and derive and calculate several measures of the extent of competition both on individual routes and at the airports in our sample. The results show the wide diversity of route networks that existed in the airline industry in 1989--a phenomenon that may help to explain the failure of several major carriers since then.

Suggested Citation

  • Neil Bania & Paul W. Bauer & Thomas J. Zlatoper, 1992. "U.S. air passenger service: a taxonomy of route networks, hub locations, and competition," Working Paper 9216, Federal Reserve Bank of Cleveland.
  • Handle: RePEc:fip:fedcwp:9216
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    References listed on IDEAS

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    1. Severin Borenstein, 1992. "The Evolution of U.S. Airline Competition," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 45-73, Spring.
    2. Paul W. Bauer & Thomas J. Zlatoper, 1989. "The determinants of direct air fares to Cleveland: how competitive?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 2-9.
    3. Morrison, Steven A & Winston, Clifford, 1987. "Empirical Implications and Tests of the Contestability Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 53-66, April.
    4. Hurdle, Gloria J, et al, 1989. "Concentration, Potential Entry, and Performance in the Airline Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 119-139, December.
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    Citations

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    Cited by:

    1. Juan Martín & Augusto Voltes-Dorta, 2008. "Theoretical Evidence of Existing Pitfalls in Measuring Hubbing Practices in Airline Networks," Networks and Spatial Economics, Springer, vol. 8(2), pages 161-181, September.
    2. Fangwu Wei & Tony H. Grubesic, 2015. "A Typology of Rural Airports in the United States: Evaluating Network Accessibility," The Review of Regional Studies, Southern Regional Science Association, vol. 45(1), pages 57-85, Spring.
    3. Wei, Fangwu & Grubesic, Tony H., 2016. "The pain persists: Exploring the spatiotemporal trends in air fares and itinerary pricing in the United States, 2002–2013," Journal of Air Transport Management, Elsevier, vol. 57(C), pages 107-121.
    4. Nakagawa, Dai & Aoyama, Yoshitaka & Ito, Tadashi & Nishizawa, Hiroyuki, 2005. "Assessment of passenger benefits brought about by international airport projects," Transport Policy, Elsevier, vol. 12(6), pages 512-524, November.
    5. José Ignacio Castillo Manzano & Fernando González Laxe & Lourdes López Valpuesta, 2006. "Una Introducción al Análisis del Tráfico de Contenedores mediante los Vectores Autoregresivos," Economic Analysis Working Papers (2002-2010). Atlantic Review of Economics (2011-2016), Colexio de Economistas de A Coruña, Spain and Fundación Una Galicia Moderna, vol. 5, pages 1-23, January.
    6. Liu, Zhi-Jun & Debbage, Keith & Blackburn, Brendan, 2006. "Locational determinants of major US air passenger markets by metropolitan area," Journal of Air Transport Management, Elsevier, vol. 12(6), pages 331-341.
    7. Jaap deWit & Jan Veldhuis & Guillaume Burghouwt & Hidenobu Matsumoto, 2009. "Competitive Position Of Primary Airports In The Asia-Pacific Rim," Pacific Economic Review, Wiley Blackwell, vol. 14(5), pages 639-650, December.
    8. Hayes, Kathy J. & Ross, Leola B., 1996. "Is airline price dispersion the result of careful planning or competitive forces?," Working Papers 9607, Federal Reserve Bank of Dallas.
    9. Hsu, Chaug-Ing & Wen, Yuh-Horng, 2000. "Application of Grey theory and multiobjective programming towards airline network design," European Journal of Operational Research, Elsevier, vol. 127(1), pages 44-68, November.
    10. Van Landeghem, H. & Beuselinck, A., 2002. "Reducing passenger boarding time in airplanes: A simulation based approach," European Journal of Operational Research, Elsevier, vol. 142(2), pages 294-308, October.
    11. Tony H. Grubesic & Timothy C. Matisziw, 2011. "World Cities and Airline Networks," Chapters,in: International Handbook of Globalization and World Cities, chapter 10 Edward Elgar Publishing.
    12. Gupta, Gautam & Goodchild, Anne & Hansen, Mark, 2011. "A competitive, charter air-service planning model for student athlete travel," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 128-149, January.
    13. Sun, Xiaoqian & Wandelt, Sebastian, 2014. "Network similarity analysis of air navigation route systems," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 416-434.
    14. Chen, Jeng-Fung, 2007. "A hybrid heuristic for the uncapacitated single allocation hub location problem," Omega, Elsevier, vol. 35(2), pages 211-220, April.
    15. Marti­n, Juan Carlos & Román, Concepción, 2003. "Hub location in the South-Atlantic airline market: A spatial competition game," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(10), pages 865-888, December.
    16. Anderson, William P. & Gong, Gang & Lakshmanan, T.R., 2005. "Competition in a Deregulated Market for Air Travel: The U.S. Domestic Experience and Lessons for Global Markets," Research in Transportation Economics, Elsevier, vol. 13(1), pages 3-25, January.

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    Airlines;

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