This paper analyzes the responses of incumbent hub-and-spoke carriers to low cost carrier (LCC) entry on routes served to and from their hubs over the past decade. Our analysis finds that the typical price and capacity response by incumbent hub-and-spoke carriers to LCC entry has been fairly...

This paper documents the growth of low cost carriers (LCCs) in the U.S. airline industry since 1990. By estimating simple probit models, we quantify the market characteristics which have influenced nonstop LCC entry in 351 city-pair markets over the past decade. We confirm that pre-entry market...

Using data from easyJet, Ryanair and Southwest, we show that for their flights these airlines set a sequence, based on the seats' order of sale, of non-strictly monotone increasing fares. A model where prices cannot be continuously adjusted due to organizational frictions and technological...

This paper uses merger simulations to predict post-merger prices for six major airline mergers from the 1980's, and compares these predictions with actual post-merger prices. Simulations which incorporate varying degrees of post-merger information allow us to decompose the actual price changes...

Empirical applications of the translog cost function often conclude that firms operate at increasing returns to scale. From the viewpoint of economic theory, this does not make sense. We demonstrate that empirical cost functions ignore the fact that differences in firm output depends on cost...

In this paper we study the relationship between airport efficiency and two factors: an airport’s centrality in the EU network, and the intensity of competition from alternative airports in the same catchment area. We apply a two-stage econometric model based on the Simar & Wilson (2007)...

We investigate how the intensity of competition among airports affects their technical efficiency by computing airports’ markets on the basis of a potential demand approach. We find that the intensity of competition has a negative impact on airports’ efficiency in Italy during the...

We estimate a conditional logit model to measure the impact of airport and airline supply characteristics on the air travel choices of passengers departing from one of three San Francisco Bay area airports and arriving at one of four airports in greater Los Angeles in October 1995. Non-price...

We analyze the phenomenon of hub dominance by developing a model relating fares to distance, using the main leg of intercontinental flights for scaling purposes. Our results indicate that at least some of the major European carriers place a mark up on flights originating from or going to their...

This paper analyzes U.S. airline price and passenger data disaggregated at the fare class level for the year 2000. We find that although average prices to and from most airlines' hubs tend to be higher than those throughout the remainder of their systems, much of the difference can be explained...