Regulation, Competition and Network Evolution in Aviation

Abstract

Our focus is the evolution of business strategies and network structure decisions in the commercial passenger aviation industry. The paper reviews the growth of hub-and-spoke networks as the dominant business model following deregulation in the latter part of the 20 century, followed by the emergence of value-based airlines as a global phenomenon at the end of the century. The paper highlights the link between airline business strategies and network structures, and examines the resulting competition between divergent network structure business models. In this context we discuss issues of market structure stability and the role played by competition policy.