Where to enter in hub-spoke networks?

摘要

This paper investigates entry route choices in hub-spoke airline networks. The spoke market size is generally larger than the rim market size. The scales of demand for the connecting and direct routings in the rim market are different. Passengers differentiate flights of carriers. We demonstrate that it is more profitable for new entrants to enter the spoke route (the rim route) when the scale of demand for the connecting route (the direct route) is comparatively larger. However, this is not always the case. We also find interesting cases where entering a route with a smaller scale of demand is comparatively profitable. Furthermore, the deviation of preference for entry route between entrants and policy authority with welfare concerns exists.