Hub location in the South-Atlantic airline market: A spatial competition game

Marti­n, Juan Carlos and Concepción Román

Transportation Research Part A: Policy and Practice, 2003, vol. 37, issue 10, 865-888

Abstract: The paper analyzes the airlines' hub location problem through a spatial competition game played in two stages. First, airlines sequentially choose the location of their hub and second, they compete offering direct or connecting services between each city-pair. Different outcomes in the first stage will affect competition in the second, and as a consequence, the market share that airlines can obtain. Given actual demand patterns, results of the model are applied to the South-Atlantic airline market. We study the subgame perfect equilibriums obtained as a result of competition in each city-pair to anticipate where airlines will probably locate their hubs once an "open skies" policy is adopted in this market.

Date: 2003
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