Airline hubbing—Some implications for airport economics

Abstract

The phenomenon of airline hubbing has been on the increase in recent years. Hubbing arises when airlines attempt to maintain high levels of aircraft utilization and to take advantage of scale economies. Passengers also appear to benefit from hubbing in the form of increased frequency of service. The nature of traffic generated at the hub airports implies some negative economic impacts which suggest that hub pricing should be considered seriously. This study shows hubbing to be "inelastic" to hub pricing and concludes that there are significant potential benefits to the airports to be gained from some form of hub pricing.