The Geography of Deregulation in the U.S. Airline Industry

Abstract

The U.S. domestic airline industry was deregulated in 1978 as part of a regulatory reform movement that has transformed the banking, telecommunications, energy, and transportation industries. A geography of deregulation has emerged conforming to a core-periphery structure in which industries are increasingly controlled by fewer firms through their major headquarters and operations centers. As a consequence of industry consolidation and the shift to "hub-and-spoke" network service structures, strong domestic "hubs" (e.g., Dallas, Chicago, Atlanta) and international gateway cities (e.g., Los Angeles, New York, San Francisco) have emerged as the core control centers of the air-transport system, while "spoke" cities have become peripheralized in the process. The group of core centers has benefited more than the periphery from increased air transportation employment, frequency of service, passenger flow, and lower fares, except in cases where hubs were dominated by one or two airlines, where fares rose. The latter is manifested in a pattern of higher fares in the more concentrated hubs of the southeastern U.S. and their peripheral hinterlands.

How air transport connects the world – A new metric of air connectivity and its evolution between 1990 and 2012

“…While analyses of network structures and performance (Burghouwt, Hakfoort, 2001;Bowen, 2002;Reynolds-Feighan, 2007;Paleari et al, 2010;Wang et al, 2011;Lin, 2012) as well as market developments following airline deregulation (Borenstein, 1992;Dempsey, 2002;Goetz, Sutton, 1997;Chan, 2000), the emergence of new airline business models (Dobruszkes, 2006(Dobruszkes, , 2009(Dobruszkes, , 2013Fan, 2006;Francis et al, 2006;Hooper et al, 2011;Budd et al, 2014;) and economic crises (Rimmer, 2000;Alderighi, Cento, 2004;Wittman, 2014) have been conducted, a consistent framework for global supply-side market analyses from the connectivity perspective has not been applied, to date. As shown by Suau-Sanchez and Burghouwt (2012), the development of such an approach is particularly important given the increasing significance of indirect connections, which require network analyses to simultaneously model network geography and temporal schedule coordination.…”

“…(Goetz, Sutton, 1997 (Wittman, 2014) and thereby increased the "peripheralization" (Goetz, Sutton, 1997) of secondary and tertiary US airports. …”

Anytime? Anywhere? The seasonality of flight offers in Central Europe

“…On the other hand, the impact of centralisation of air transport in the world's peripheral regions (especially Africa) has been much lower, contributing to their partial marginalisation. Therefore, air transport has on a global level become a mode that expands coreperiphery polarisation (Goetz and Sutton, 1997). One of the results of the introduction of the hub-and-spoke system is the higher frequency of air transport and higher efficiency of air transport operations from the airlines' perspectives (Dobruszkes, 2009).…”

“…Since the 1970s, continuous growth has been observed in the number of transported persons and goods, growth in transport performance, as well as in the average distance covered by air transport. Such recent abrupt growth was only hindered, albeit temporarily, by recent economic crises, especially recognised in 1997/1998(Dobruszkes and Van Hamme, 2011. Generally speaking, the economic crises had a stronger effect on the volume of transport in goods than in the transport of persons.…”

Investigation of the Impacts of Effective Fuel Cost Increase on the U.S. Air Transportation Network and Fleet

“…Fuel efficiency measures are unlikely to buffer airlines from volatility in crude oil prices and increases in the effective cost of fuel, motivating the need to understand how air transportation systems will adapt and what the potential social and economic consequences are from increases in the effective cost of fuel. Goetz and Sutton (1997) 25 used a core-periphery structure to explain the geographic effects of deregulation on the airline industry from 1978-1993. Their findings showed that core centers (the large hubs and international gateways, such as Chicago, Atlanta and New York) benefited more than the periphery spoke cities from increased air transportation employment, frequency of service, passenger flow, and lower fares, except where one or two airlines dominated a hub.…”