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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 Papers (Old Series) 9216, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9216
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    References listed on IDEAS

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    1. Oum, Tae H. & Tretheway, Michael W., 1990. "Airline Hub and Spoke Systems," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 30(2).
    2. Severin Borenstein, 1992. "The Evolution of U.S. Airline Competition," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 45-73, Spring.
    3. Paul W. Bauer & Thomas J. Zlatoper, 1989. "The determinants of direct air fares to Cleveland: how competitive?," Economic Review, Federal Reserve Bank of Cleveland, vol. 25(Q I), pages 2-9.
    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.
    5. Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
    6. 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.
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