Airport Congestion and Airline Network Structure

Xavier Fageda and Ricardo Flores-Fillol

Working Papers from Universitat Rovira i Virgili, Department of Economics

Abstract: This paper provides a theoretical and empirical analysis of the relationship between airport congestion and airline network structure. We find that the development of hub-and-spoke (HS) networks may have detrimental effects on social welfare in presence of airport congestion. The theoretical analysis shows that, although airline pro ts are typically higher under HS networks, congestion could create incentives for airlines to adopt fully-connected (FC) networks. However, the welfare analysis leads to the conclusion that airlines may have an inefficient bias towards HS networks. In line with the theoretical analysis, our empirical results show that network airlines are weakly infl uenced by congestion in their choice of frequencies from/to their hub airports. Consistently with this result, we con firm that delays are higher in hub airports controlling for concentration and airport size. Keywords: airlines; airport congestion; fully-connected networks, hub-and-spoke net- works; network efficiency JEL Classifi cation Numbers: L13; L2; L93

Keywords: Línies aèries; Aeroports -- Direcció i administració; Oligopolis; Empreses -- Direcció i administració; Aviació comercial; 338 - Situació econòmica. Política econòmica. Gestió; control i planificació de l'economia. Producció. Serveis. Turisme. Preus (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-net, nep-reg, nep-tre, nep-tur and nep-ure
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http://hdl.handle.net/2072/211753

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Chapter: Airport Congestion and Airline Network Structure (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:urv:wpaper:2072/211753

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