Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7435590 | Journal of Air Transport Management | 2016 | 8 Pages |
Abstract
This paper studies the price effect of de-hubbing, which occurs when an airline ceases hub operations at an airport. We develop a simple theoretical model to study the impact of de-hubbing on prices and quantities of direct flights at the hub airport. Using an event study of seven cases of de-hubbing between 1993 and 2009, we analyze how average airfares change following de-hubbing. Consistent with the theoretical implications, the empirical results suggest that airfares decrease when there is a low-cost carrier presence at the de-hubbed airport, whereas airfares increase when the de-hubbed airport is not serviced by a low-cost carrier.
Related Topics
Social Sciences and Humanities
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Strategy and Management
Authors
Kerry M. Tan, Andrew Samuel,