We address the issue of the sources of dominant airlines' pricing power by separating the premium due to hub operations from that due to airport dominance. The presence of airports serving as hubs for two carriers enables such identification via difference-in-differences. Moving from lower to higher prices, the total pricing premium of hub operators (both dominant and nondominant) increases; while the share of the airport dominance premium diminishes relative to that of the hub premium. Absence of a hub premium at the lower end of the price distribution (and lack of dominance premium at the higher prices) suggests frequent flier programs rather than product differentiation as the likely dominant source of the hub operator's pricing power. The dominant airline's ability to charge higher fares due to either its airport market share or access to scarce airport facilities is confirmed.
Hubs versus Airport Dominance
Transportation science ; 50 , 1
2016
Article (Journal)
English
Local classification TIB: | 770/1935/7000 | |
BKL: | 55.80 / 55.80 Verkehrswesen, Transportwesen: Allgemeines |
British Library Online Contents | 2016
|Debunking some common myths about airport hubs
Online Contents | 2002
|VERIFICATION OF RUC SURFACE FORECASTS AT MAJOR U.S. AIRPORT HUBS
British Library Conference Proceedings | 2002
|Depeaking Strategies for Improving Airport Ground Operations Productivity at Midsize Hubs
Transportation Research Record | 2009
|