Multilayer networks and route entry into the airline industry: Evidence from the U.S. domestic market

Abstract

In this paper we apply elements of multilayer network theory to the airline industry and study route entry into the U.S. domestic market. We find that airlines tend to follow the market leader and enter a route already served by the incumbent. Moreover, using multilayer network variables, our analysis confirms that entry is more likely when the airline operates other routes at the two endpoints of the target route. On the managerial side, our results may help each airline to foresee and therefore anticipate the competitors' entry move. On the policy side, our approach, based on multilayer network theory, may be adopted by competition authorities to detect possible firm's practices that can result from airlines' network, and, more generally, by national public authorities to understand the centrality of each airline's network in each country.