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Airline market concentration

Author

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  • Belobaba, Peter P.
  • Van Acker, Jan
Abstract
Changes in competition in selected US domestic airline markets since deregulation of the airline industry are examined in this paper, focusing on both the top 100 markets and the largest markets out of dominated cities. Our analysis of carrier concentration in origin-destination markets since 1978 shows an increasing trend in concentration in recent years, after an initial period of decreases. The average concentration levels in the top 100 markets were still lower in 1991 than in 1979. At the same time, average concentration levels in 150 markets out of ‘dominated’ cities had returned to 1979 levels by 1991, after reaching a low point in 1985. Both the increases in competition that occurred during the first years of deregulation and the subsequent decreases can be explained by two structural changes experienced in the US airline industry: the numerous mergers of large carriers during the late 1980s and, more important, the development of extensive hub and spoke networks by virtually all airlines.

Suggested Citation

  • Belobaba, Peter P. & Van Acker, Jan, 1994. "Airline market concentration," Journal of Air Transport Management, Elsevier, vol. 1(1), pages 5-14.
    • Handle: RePEc:eee:jaitra:v:1:y:1994:i:1:p:5-14
    DOI: 10.1016/0969-6997(94)90026-4
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    References listed on IDEAS

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    1. Curry, B & George, K D, 1983. "Industrial Concentration: A Survey," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 203-255, March.
    2. Hurdle, Gloria J, et al, 1989. "Concentration, Potential Entry, and Performance in the Airline Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 119-139, December.
    3. Severin Borenstein, 1989. "Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 344-365, Autumn.
    4. Morrison, Steven A & Winston, Clifford, 1990. "The Dynamics of Airline Pricing and Competition," American Economic Review, American Economic Association, vol. 80(2), pages 389-393, May.
    5. Morrison, Steven A & Winston, Clifford, 1987. "Empirical Implications and Tests of the Contestability Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 53-66, April.
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    Cited by:

    1. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming & Zhang, Yahua, 2020. "Impact of high-speed rail on market concentration and Lerner index in China's airline market," Journal of Air Transport Management, Elsevier, vol. 83(C).
    2. Grosche, Tobias & Klophaus, Richard & Seredyński, Adam, 2020. "Market concentration in German air transport before and after the Air Berlin bankruptcy," Transport Policy, Elsevier, vol. 94(C), pages 78-88.
    3. Zhang, Qiong & Yang, Hangjun & Wang, Qiang & Zhang, Anming, 2014. "Market power and its determinants in the Chinese airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 64(C), pages 1-13.
    4. Hüschelrath, Kai & Müller, Kathrin, 2011. "Low cost carriers and the evolution of the US airline industry," ZEW Discussion Papers 11-051, ZEW - Leibniz Centre for European Economic Research.
    5. Cosmas, Alex & Love, Robert & Rajiwade, Swapnil & Linz, Marco, 2013. "Market clustering and performance of U.S. OD markets," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 20-25.

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