A Model of Scheduling in Airline Networks: How a Hub-and-Spoke System Affects Flight Frequency, Fares and Welfare

By Jan K. Brueckner, Yimin Zhang. Journal of Transport Economics and Policy, 2001

149 citations recorded by the source corpus.

This paper provides a comprehensive economic analysis of scheduling decisions in airline networks. Although it is widely believed that the growth of hub-and-spoke networks has raised flight frequencies, the only analysis of this question is contained in a recent paper by Berechman and Shy (1998), who analyze an incomplete model. The present analysis shows that flight frequency is higher in a hub-and-spoke (HS) network than in a fully-connected (FC) network, confirming the conventional wisdom. Another result is that, despite lower cost per passenger under the HS network, greater flight frequency allows the airline to charge a higher fare to local passengers. This finding suggests that the downward pressure on fares due to economies of density may be partly or fully offset by the effect of higher flight frequency in an HS network, so that the net fare impact of such networks becomes uncertain. Finally, the paper's welfare analysis shows that the airline provides excessive flight frequency relative to the social optimum, and that it may select the wrong network type.

Subfields: Economics and Econometrics, Strategy and Management, Transportation

View Paper: https://www.semanticscholar.org/paper/45065382ca1239bda86ba2c4447a092b093a2ee4

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Citations in the corpus

Flight frequency and mergers in airline markets (2003, background): “Note that Panzar (1979), Lederer (1993) and Brueckner and Zhang (2001) are theoretical analyses of location of flight departure times, while Morrison and Winston (1995) provide an in-depth empirical overview of the industry. timization problem yields the following system of linear inverse demand…”
Air Transport Liberalization and Its Impacts on Airline Competition and Air Passenger Traffic (2009, background): “13 ee, e.g., Morrison and Winston (1987), Berechman and Shy (1998), Brueckner and Zhang (2001), and Brueckner (2004) 14 Borenstein (1989), Spiller (1989), Berry (1990), Bittlingmayer (1990), Brueckner and Spiller (1991), Brueckner et al. (1992), Zhang and Wei (1993), Oum et al. (1995), Zhang…”
Hub-and-spoke network alliances and mergers: Price-location competition in the airline industry (2007, background): “McShan and Windle (1989), Brueckner and Spiller (1994), Nero (1999), Barla and Constantatos (2000), Pels et al. (2000), Adler and Berechman (2001) and Brueckner and Zhang (2001).”