| Abstract: |
To keep load factors high while offering high frequency service, airlines tend
to reduce the size of the aircraft they use. At many of the world’s largest
airports there are fewer than 100 passengers per air transport movement,
although congestion and delays are growing. Furthermore, demand for air
transport is predicted to continue growing but aircraft size is not. This
paper aims to investigate and explain this phenomenon, the choice of
relatively small aircraft. It seems that this choice is associated mainly with
the benefits of high frequency service, the competitive environment in which
airlines operate and the way airport capacity is allocated and priced.
Regression analysis of over 500 routes in the US, Europe and Asia provides
empirical evidence that the choice of aircraft size is mainly influenced by
route characteristics (e.g. distance, level of demand and level of
competition) and almost not at all by airport characteristics (e.g. number of
runways and whether the airport is a hub or slot coordinated). We discuss the
implications of this choice of aircraft size and suggest that some market
imperfections exist in the airline industry leading airlines to offer
excessive frequency on some routes and too low frequency on others. |