Traffic distribution in low-cost and full-service carrier networks in the US air transportation market

Abstract

After deregulation in the US in 1978, air carrier networks were increasingly focused around a small number of hubs. These ‘hub-and-spoke’ (HS) networks were the predominant form of network organisation of large carriers as well as smaller regional and commuter carriers. The passenger carrier networks typically consisted of between three and seven hubs, while the air freight carrier networks were typically focused around one or two hubs. A variety of measures of the traffic distribution in carriers’ networks have been presented in the economics and regional science literature. These measures are reviewed and compared for a sample of US major carriers for the period 1969–99. The HS network structure requires a concentration of traffic in both space and time. The summary measures presented focus on measuring the spatial concentration at discrete locations in the networks. The emergence of a new wave of low-cost airline entrants has been a significant component in the more recent development of the US air transport industry. Southwest Airlines began its operations in the early 1970s and has been copied in the US and Europe in terms of its network organisation, management, service and operating characteristics. The US ‘low-cost’ operators are examined in the paper in terms of their traffic distribution patterns using the same summary measures used for the full-service operators. It is demonstrated that the low-cost carriers have a lower level of concentration on average than the full-service carriers. The low-cost carriers focus their traffic flows around a limited number of key nodes—these nodes function as points of entry or exit rather than transfer points.