NETWORK STRUCTURE AND CAPACITY REQUIREMENT: THE CASE OF CHINA

摘要

This paper analyzes capacity requirement by alternative network structures. Based on a simple duopoly model, it is concluded that the capacity required under the HS network would approach four times as large as the capacity required under the FC network, as the number of nodes in a network increases. In recent years, China has experienced unprecedented growth in the demand for air travel, which has put continuous pressure for the expansion in airport capacity. Still as a developing country, China suffers from insufficient investment in infrastructure. Therefore, given scarce capacity, it is more efficient for the major air carriers not to adopt the hub-and-spoke network in Chinese domestic markets.