The Home Carrier Advantage in Civil Aviation

Tinbergen Institute Discussion Paper No. TI 05-011/3

25 Pages Posted: 24 Jan 2005

See all articles by Mark Lijesen

Mark Lijesen

CPB Netherlands Bureau of Economic Policy Analysis

Peter Nijkamp

VU University of Amsterdam - Department of Spatial Economics; Tinbergen Institute

Eric A. J. H. Pels

Vrije Universiteit - Department of Spatial Economic

Piet Rietveld

VU University Amsterdam - Department of Spatial Economics (Deceased)

Date Written: January 2005

Abstract

This paper analyzes the relative economic power position of home carriers in hub-and-spoke systems. Hub-and-spoke systems may lower costs on densely traveled routes and enable economically viable operations on less densely traveled routes. The reverse side is probably that carriers enjoy significant market power at their home base, often labeled the home carrier advantage. The paper offers a concise overview of the literature in this field, and addresses next empirically this issue for European home carriers. We found empirically that at least some European carriers charge premiums for flights originating from their hubs. The hub premiums of Lufthansa, Swissair and Air France are significantly higher than those of the other companies in our sample.

Keywords: Airlines, airports, networks, homecarrier advantage

JEL Classification: R41, D4

Suggested Citation

Lijesen, Mark and Nijkamp, Peter and Pels, Eric A.J.H. and Rietveld, Piet, The Home Carrier Advantage in Civil Aviation (January 2005). Tinbergen Institute Discussion Paper No. TI 05-011/3, Available at SSRN: https://ssrn.com/abstract=652983 or http://dx.doi.org/10.2139/ssrn.652983

Mark Lijesen (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Peter Nijkamp

VU University of Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 20 4446091 (Phone)
+31 20 4445611 (Fax)

Tinbergen Institute

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Eric A.J.H. Pels

Vrije Universiteit - Department of Spatial Economic ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31-20-4446049 (Phone)
+31-20-4446004 (Fax)

Piet Rietveld

VU University Amsterdam - Department of Spatial Economics (Deceased)

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 20 4446097 (Phone)
+31 20 4446004 (Fax)

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