References (10)



Hubs versus Airport Dominance

Volodymyr Bilotkach

Newcastle Business School

Vivek Pai

University of California, Irvine - Department of Economics

February 25, 2009

This study separates what is known in the literature as the airport dominance effect (dominant airline's ability to charge higher fares for trips to/from the airport at which it has the dominant position) into what can be interpreted as quality and market power based components, using price data for trips to/from/through five US airports, each serving as a hub for two US carriers. We find market power based component of the dominance premium is smaller than the quality based one. We also determine that dominant carriers exercise their market power on an average customer rather than a price insensitive business traveler. This is in contrast to what previous studies suggested.

Number of Pages in PDF File: 29

Keywords: Airlines, Hub Premium, Airport Dominance, Frequent Flier Programs

JEL Classification: L13, L29, L50, L93

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Date posted: February 26, 2009  

Suggested Citation

Bilotkach, Volodymyr and Pai, Vivek, Hubs versus Airport Dominance (February 25, 2009). Available at SSRN: http://ssrn.com/abstract=1349381 or http://dx.doi.org/10.2139/ssrn.1349381

Contact Information

Volodymyr Bilotkach (Contact Author)
Newcastle Business School ( email )
208, City Campus East-1
Newcastle upon-Tyne, NE1 8ST
United Kingdom
Vivek Pai
University of California, Irvine - Department of Economics ( email )
3151 Social Science Plaza
Irvine, CA 92697-5100
United States
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References:  10

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