Technology, Business Models and Network Structure in the Airline Industry

Xavier Fageda and Ricardo Flores-Fillol
Additional contact information
Ricardo Flores-Fillol: Department of Economics, Universitat Rovira i Virgili, Avinguda de la Universitat 1, 43204 Reus, Spain.

No XREAP2010-14, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: Network airlines have been increasingly focusing their operations on hub airports through the exploitation of connecting traffic, allowing them to take advantage of economies of traffic density, which are unequivocal in the airline industry. Less attention has been devoted to airlines? decisions on point-to-point thin routes, which could be served using different aircraft technologies and different business models. This paper examines, both theoretically and empirically, the impact on airlines ?networks of the two major innovations in the airline industry in the last two decades: the regional jet technology and the low-cost business model. We show that, under certain circumstances, direct services on point-to-point thin routes can be viable and thus airlines may be interested in deviating passengers out of the hub.

Keywords: regional jet technology; low-cost business model; point-to-point network; hub-and-spoke network (search for similar items in EconPapers)
JEL-codes: L13 L2 L93 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2010-12, Revised 2010-12
New Economics Papers: this item is included in nep-com, nep-cse, nep-ind, nep-net and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2010-14.pdf First version, 2010 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2010-14.pdf Revised version, 2010 (application/pdf)

Related works:
Working Paper: Technology, business models and network structure in the airline industry (2010)
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