The explanation for the nearly universal post-deregulation adoption of hubbing is discussed, and explanations for it are examined. The explanation that hubbing increases operational efficiency is examined. This is done by including hubbing in the specification of airline cost functions and calibrating them using pooled cross-sectional data spanning the 1976-84 time period. There was no direct connection between the degree of hubbing and airline cost levels over these years. It is concluded that the shift to hubbed route structures since deregulation is not cost driven. This points to the need to consider other explanations such as that it is a market strategy that allows individual airlines to dominate major airports and exploit consumer preferences for single-carrier service. This paper covers the theoretical basis for connecting airline hubbing and airline efficiency; methodology; results; and the implications of the findings for the productivity-hubbing relationship.

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  • Accession Number: 00490748
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jan 31 1990 12:00AM