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Explores the state of competition in the domestic aviation industry. Specifically, it attempts to determine whether hubs are producing the benefits of competition or, as some argue, permitting the dominant carrier at the hub to impose monopoly prices on the public. Witnesses include: Senators Mike DeWine, Herbert Kohl, and Charles E. Grassley; Robert J. Spane, pres. and CEO, Vanguard Airlines; Richard B. Hirst, sr. v.p. for corporate affairs, Northwest Airlines; Kevin C. Stamper, chmn. and CEO, ProAir; Cyril D. Murphy, v.p. for international affairs, United Airlines; and Steven A. Morrison, Prof. of economics, Northeastern University.
The ongoing deregulation and liberalization of worldwide air transport markets confronts airport planners with an increasingly problematic context. On the one hand, the capital intensive, large-scale and complex airport investments need a detailed, long/medium-term planning of airport infrastructure. Such planning requires at least predictable traffic volumes (and traffic composition) within the planning horizon. On the other hand, airline route networks are increasingly dynamic structures that frequently show discontinuous changes. As a consequence, the much more volatile airport traffic restricts the value of detailed traffic forecasts. Volatility of airport traffic and its composition requires flexibility of airport strategies and planning processes. The book explores this dilemma through a detailed study of airline network development, airport connectivity and airport planning in the deregulated EU air transport market. The questions the book seeks to answer are: · how have airlines responded to the regime changes in EU aviation with respect to the configuration of their route networks? · what has been the impact of the reconfiguration of airline network configurations for the connectivity of EU airports? · how can airport planners and airport authorities deal with the increasingly uncertain airline network behaviour in Europe?
This paper estimates a model of airline competition that captures the two major features of the industry: product differentiation and economies of density. The results not only provide support to some of the traditional common wisdom in the industry, but are also useful for understanding major puzzles concerning the evolution of the industry. The estimates indicate that a hubbing airline's ability to raise prices is focused on tickets that appeal to price-inelastic business travelers, who favor the origin-hub airline, even while paying an average premium of 20%. These high prices do not, however, provide a `monopoly umbrella' to other non-hub airlines. Finally, on the cost side there is evidence of economies of density (and therefore cost economies of hubbing) on longer routes. Consistent with the `Southwest Airlines' effect, there is no evidence of economies of density on shorter routes.
Seminar paper from the year 2016 in the subject Business economics - Supply, Production, Logistics, grade: 1,7, University of applied sciences, Cologne, language: English, abstract: The paper provides insight into hub-and-spoke and point-to-point logistics of the airline industry. The author weighs up the advantages and disadvantages of both strategies. This paper is dedicated to the most applied international logistic network systems, which are: hub-and-spoke and point-to-points. Airlines use these strategic networks in order to reduce different types of costs, optimize their network and flexibility of flight operations. The author elaborates on the different network strategies by putting his focus on one of the biggest German and European airline Lufthansa.