Airline strategies for aircraft size and airline frequency with changing demand and competition: A simultaneous-equations approach for traffic on the north Atlantic

Airport planners need to know the forecast demand on the facilities provided airside at airports. For this they need to know how airlines will deal with traffic in terms of the size of aircraft and frequency of service. In response to increasing demand, airlines may increase capacity by increasing the frequency of flights or they may choose to increase aircraft size. This may yield operating cost economies. If the airports they operate from are capacity constrained they will be limited in the extent that they can change frequency that will limit their ability to compete with the number of frequencies offered. Consequently, these airports are excluded as are major hubs as frequencies will be influenced by connecting passengers. Routes are identified on the north Atlantic that can be analysed and conclusions are suggested on the basis of three stage least-squares estimates for pooled time series-cross section data. An increase in passengers on the whole will result in a larger increase in frequency than in aircraft size but the impact of competition does not yield significant results due to the strategy of excluding certain categories of airport.