Abstract

http://ssrn.com/abstract=1908745
 


 



The Construction of a Low Cost Airline Network


Kathrin Mueller


Centre for European Economic Research (ZEW)

Volodymyr Bilotkach


Newcastle Business School

Kai Hüschelrath


Centre for European Economic Research (ZEW)

July 2011

ZEW - Centre for European Economic Research Discussion Paper No. 11-052

Abstract:     
The paper investigates the construction of a low cost airline network by analyzing JetBlue Airways' entry decisions into nonstop domestic U.S. airport - pair markets between 2000 and 2009. Adopting duration models with time-varying covariates, we find that JetBlue consistently avoided concentrated airports and targeted concentrated routes; network economies also affected entry positively. For non-stop entry into a route that has not been served on a non-stop basis before, our analysis reveals that the carrier focused on thicker routes and secondary airports, thereby avoiding direct confrontation with network carriers. Non-stop entry into existing non-stop markets, however, shows that JetBlue concentrated on longer-haul markets and avoided routes already operated by either other low cost carriers or network carriers under bankruptcy protection.

Number of Pages in PDF File: 34

Keywords: Airline industry, network, entry, low cost carrier

JEL Classification: L11, L23, L93

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Date posted: August 12, 2011  

Suggested Citation

Mueller, Kathrin and Bilotkach, Volodymyr and Hüschelrath, Kai, The Construction of a Low Cost Airline Network (July 2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-052. Available at SSRN: http://ssrn.com/abstract=1908745 or http://dx.doi.org/10.2139/ssrn.1908745

Contact Information

Kathrin Mueller
Centre for European Economic Research (ZEW) ( email )
P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany
Volodymyr Bilotkach
Newcastle Business School ( email )
Newcastle upon-Tyne, NE1 8ST
United Kingdom
Kai Hüschelrath (Contact Author)
Centre for European Economic Research (ZEW) ( email )
P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany
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