How new entrant carriers may use returns to airline networks in competition is discussed. In addition to overall returns to scope and density, there are more localized returns that are based on network shape. A network shape index, which is a measure of airline network concentration based on the Herfindahl-Hirschman index, is described. Airlines have chosen many different shapes as measured by the network shape index, and new entrants tend to be shaped differently from major airlines. A model of new entrant profitability relative to the major airlines is developed. New entrants whose network shape indices are substantially different from the major airlines have niche networks, and the model indicates that niche networks are associated with higher profitability.
Niche Networks for New Entrants
Transportation Research Record: Journal of the Transportation Research Board
Transportation Research Record: Journal of the Transportation Research Board ; 1567 , 1 ; 17-25
1997-01-01
Article (Journal)
Electronic Resource
English
Niche Networks for New Entrants
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