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Explaining changes and trends in the airline industry: Economies of density, multiproduct scale, and spatial scope

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  • Jara-Díaz, Sergio R.
  • Cortés, Cristián E.
  • Morales, Gabriela A.

Abstract

Changes in the shape and size of airline networks have not been explained clearly from a cost perspective based on the finding of increasing returns to density for given route structures and constant returns to scale for variable network size. We reassessed the estimates of these economies by using new scale and scope indices, finding savings due to changes in route structures and various types of economies of spatial scope not previously calculated: network size, trunk-local services and domestic-international services. Results contribute new insights on the role of cost incentives in the observed changes and trends in the airline industry.

Suggested Citation

  • Jara-Díaz, Sergio R. & Cortés, Cristián E. & Morales, Gabriela A., 2013. "Explaining changes and trends in the airline industry: Economies of density, multiproduct scale, and spatial scope," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 13-26.
    • Handle: RePEc:eee:transe:v:60:y:2013:i:c:p:13-26
    DOI: 10.1016/j.tre.2013.09.003
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    6. Zakharenko, Roman & Luttmann, Alexander, 2023. "Downsizing the jet: A forecast of economic effects of increased automation in aviation," Transportation Research Part B: Methodological, Elsevier, vol. 170(C), pages 25-47.

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