Network Structure and Airline Scheduling

Network Structure and Airline Scheduling This paper provides a simple analysis of the effects of network structure on the scheduling, traffic, and aircraft size choices of a monopoly airline. The analysis shows that switching to a hub‐and‐spoke network leads to increases in both flight frequency and aircraft size, while stimulating local traffic in and out of the hub. In addition, HS networks are shown to be preferred by the airline when travel demand is low, when flights are expensive to operate, and when passengers place a high value on flight frequency but are not excessively inconvenienced by the extra travel time required for a connecting trip. The welfare analysis shows that the flight frequency, traffic volumes, and aircraft size chosen by the monopolist are all inefficiently low under both network types. Moreover, in the most plausible case, the monopolist's network choice exhibits an inefficient bias toward the HS network, apparently reflecting an excessive desire to economize on the number of flights. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Industrial Economics Wiley

Network Structure and Airline Scheduling

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Publisher
Wiley
Copyright
Copyright © 2004 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0022-1821
eISSN
1467-6451
D.O.I.
10.1111/j.0022-1821.2004.00227.x
Publisher site
See Article on Publisher Site

Abstract

This paper provides a simple analysis of the effects of network structure on the scheduling, traffic, and aircraft size choices of a monopoly airline. The analysis shows that switching to a hub‐and‐spoke network leads to increases in both flight frequency and aircraft size, while stimulating local traffic in and out of the hub. In addition, HS networks are shown to be preferred by the airline when travel demand is low, when flights are expensive to operate, and when passengers place a high value on flight frequency but are not excessively inconvenienced by the extra travel time required for a connecting trip. The welfare analysis shows that the flight frequency, traffic volumes, and aircraft size chosen by the monopolist are all inefficiently low under both network types. Moreover, in the most plausible case, the monopolist's network choice exhibits an inefficient bias toward the HS network, apparently reflecting an excessive desire to economize on the number of flights.

Journal

The Journal of Industrial EconomicsWiley

Published: Jun 1, 2004

References

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