Could market power explain hub premiums?
Document Type
Journal article
Source Publication
Journal of Air Transport Management
Publication Date
9-1-2017
Volume
64
Issue
A
First Page
55
Last Page
59
Publisher
Elsevier Ltd
Abstract
Hub carriers tend to charge higher fares to their passengers at their hubs. The additional charge is called the hub premium. Different studies have discussed the possible causes of the hub premium. Using the fare data at Hong Kong International Airport, this paper aims at empirically examining the factors affecting the hub premium for both economy and business class markets. The random effect models are employed in the analysis. Consistent with the theoretical results in the literature, airport market concentration, market power, flight frequency and distance are identified as significant factors that affect the hub premium in Hong Kong. In addition, this paper further investigates the impact of strategic alliance and the acquisition of Dragonair by Cathay Pacific on the hub premium.
DOI
10.1016/j.jairtraman.2017.06.024
Print ISSN
09696997
E-ISSN
18732089
Publisher Statement
Copyright © 2017 Elsevier Ltd. Access to external full text or publisher's version may require subscription.
Additional Information
Paper presented at the 19th World Conference of the Air-Transport-Research-Society (ATRS), Jul 02-05, 2015, Singapore.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Yuen, A. C. L., Lei, Z., Chow, C. K. W., & Fung, M. K. Y. (2017). Could market power explain hub premiums? Journal of Air Transport Management, 64(A), 55-59. doi: 10.1016/j.jairtraman.2017.06.024