How the presence of low-cost carrier competition scheduling differentiation

This study explores the relation between airline market structure and schedule differentiation. Using a location theory framework applied to product differentiation over the time scale, the analysis relates the level of competition, and the presence of low-cost carriers in non-stop US markets to schedule clustering. As expected from theory, it is found that schedule clustering increases with competition, resulting in reduction in product differentiation. It is also found that this tendency is lower in the presence of low-cost carriers and when there is a strong hub effect where dominant hub airline own, rather than compete with their feeder subsidiaries.