Hub location in the South-Atlantic airline market: A spatial competition game |
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| Authors: | Juan Carlos Martín Concepcin Romn |
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| Institution: | Department of Applied Economic Analysis, University of Las Palmas de Gran Canaria, Edificio Departamental de CCEE y EE, Modulo D. Campus de Tafira, Las Palmas G.C. 35017, Spain;Institute of Transportation Studies, University of California Berkeley, 109 Mclaughlin Hall, Berkeley, CA 94720, USA |
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| Abstract: | The paper analyzes the airlines’ hub location problem through a spatial competition game played in two stages. First, airlines sequentially choose the location of their hub and second, they compete offering direct or connecting services between each city-pair. Different outcomes in the first stage will affect competition in the second, and as a consequence, the market share that airlines can obtain.Given actual demand patterns, results of the model are applied to the South-Atlantic airline market. We study the subgame perfect equilibriums obtained as a result of competition in each city-pair to anticipate where airlines will probably locate their hubs once an “open skies” policy is adopted in this market. |
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| Keywords: | Location Hub-and-spoke networks Spatial competition Deregulation |
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