HUB-AIRPORT COMPETITION: CONNECTING TIME DIFFERENTIATION AND CONCESSION CONSUMPTION *

Ming Hsin Lin

Australian Economic Papers, 2006, vol. 45, issue 4, pages 299-317

Abstract: This paper develops a network model to analyse the economic effects resulting from the non-price competition between the home country's and neighbouring country's hub-airports. Focusing on the trade-off relationship between the length of the connecting time in the hub-airport and the consumption opportunities of the transfer passengers, we demonstrate theoretically that even though the hub-airport bears a cost disadvantage over its rival in providing the hub-airport service, it still has a chance to earn more profits than its rival by the setting of the connecting time. This finding suggests a new methodology for hub-airports that attempt to alleviate price competition. Copyright 2006 The Authors
Journal compilation 2006 Blackwell Publishing Ltd/University of Adelaide and Flinders University .

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