Free Content Recovering Costs by Increasing Market Share: An Empirical Critique of the S-Curve

Authors: Button, Kenneth; Drexler, Jonathan

Source: Journal of Transport Economics and Policy (JTEP), Volume 39, Number 3, September 2005 , pp. 391-410(20)

Publisher: Journal of Transport Economics and Policy

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Abstract:

An S-shaped curve relating service frequency with market share of passengers is often claimed to explain why airlines seek to increase the frequency of their services. An increase in frequency beyond some point brings about a more than proportional increase in patronage and, indirectly, in revenue. If this is the approach of airlines, however, it may prove counterproductive and instead help to explain the tendency towards excess capacity that is often seen in many airline markets. Looking at a number of major US carriers from 1990 to 2003 and their domestic market shares at several large airports there is very little evidence of the existence of any sustained S-shaped relationship; the general pattern that emerges is of a broadly linear link between frequency and market share.

Document Type: Research article

Publication date: 2005-09-01

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    Published three times a year, the journal covers all modes of transport and a wide variety of economic themes, including: Passenger Transport, Freight Transport, Shipping, Aviation, Transport Infrastructure, Environment & Energy, Traffic, Planning and Policy, Safety, Costs & Pricing, Competition, Evaluation, Productivity, Demand & Elasticities, Service Quality, Economies of Scale, Economics Regulation and Choice.

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