The impact of hub hierarchy and market competition on airfare pricing in US hub-to-hub markets

The impact of hub hierarchy and market competition on airfare pricing in US hub-to-hub markets

Journal: Air Transport Management

Author: Shengrun Zhang, Ben Derudder, Frank Witlox

Published: 2013

Abstract

This paper explores factors influencing the pricing behaviour of full-service carriers in hub-to-hub markets, which to date have rarely been the exclusive focus of research. Drawing on a 2009 dataset containing route and airfare information, we estimate a pricing model for the hub-to-hub markets in the United States. Our econometric analysis suggests that an airport’s position in carriers’ hub hierarchies, competition from low-cost carriers, and other market structure variables influence average airfares.

Keywords: Hub hierarchy; Airfare pricing; Competition; Full-service carriers

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