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Market clustering and performance of U.S. OD markets

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  • Cosmas, Alex
  • Love, Robert
  • Rajiwade, Swapnil
  • Linz, Marco

Abstract

We segment the U.S. OD markets into peer groups, using a statistical cluster analysis on OD city-pair data on the basis of market concentration, passenger volume and yield. The results show: 1) that high yield markets have, on average, consistently underperformed the industry in both passenger and revenue growth, whereas low yield markets have led the industry in both areas; and 2) mid-sized ODs have experienced higher average growth and lower volatility than the largest U.S. domestic ODs, which have accounted for the least revenue per passenger as compared to all other market types. Financial portfolio analysis indicates the prospect of long-term decision making based on OD market risk and return rather than the aggregated market share analysis used by airlines today.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jaitra:v:28:y:2013:i:c:p:20-25
    DOI: 10.1016/j.jairtraman.2012.12.006
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    References listed on IDEAS

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    Cited by:

    1. Gao, Yi & Sobieralski, Joseph B., 2021. "Spatial and operational factors behind passenger yield of U.S. nonhub primary airports," Journal of Air Transport Management, Elsevier, vol. 90(C).
    2. Castiglioni, Marco & Gallego, à ngeles & Galán, José Luis, 2018. "The virtualization of the airline industry: A strategic process," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 134-145.
    3. Heshmati, Almas & C. Kumbhakar, Subal & Kim, Jungsuk, 2016. "Persistent and Transient Efficiency of International Airlines," Working Paper Series in Economics and Institutions of Innovation 444, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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