| Abstract: | An econometric model is estimated for the aggregate demand of an airline. The demand is expressed in terms of airline network structure, operating characteristics and firm-specific variables. A number of model formulations with different combinations of explanatory variables are estimated using the two-stage least-square procedure. The results suggest that the airline aggregate demand is elastic with respect to yield, and inelastic with respect to both network size and hub dominance. Some implications regarding airline network expansion and hubbing are discussed. |
