Airline Deregulation and Airline Economics

Airports you have known?

References

• Gillen, D. “Airline Business Models and Networks” Review of Network Economics, 2006.

Outline

• History of Regulation and Deregulation in Airlines

• The evolution of Hub and Spoke Networks• Computer Reservation Systems, Frequent

Flyer Plans• The emergence of the Low Cost Carrier as the

“21st century business model”• Predatory pricing in Airlines

The LCC AdvantageAverage Stage Length Flight Cost per Seat Mile

Southwest 472 4.0

United 639 8.1

Delta 546 7.1

Sources of Cost Advantage

• Labour costs• Sales and Reservations (internet)• Maintenance costs