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Airport dominance and airline pricing power: An investigation of hub premiums in the Chinese domestic market

Chen, R and Lei, Zheng (2017) Airport dominance and airline pricing power: An investigation of hub premiums in the Chinese domestic market Transportation Research Part A: Policy and Practice, 103. pp. 509-524.

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Abstract

This research analyses the effects of airport dominance on airline pricing power with the empirical study based on the Chinese domestic market using fixed-effect panel data models. Results from the regression analysis indicate that airport dominance is the most important source of pricing power in the gradually deregulated Chinese domestic market. Hub carriers are able to charge higher prices to premium class passengers and non-hub carriers benefit from the “umbrella effects” of hub premiums. However, hub carriers are not able to translate their airport dominance to pricing power in the economy class market, whereas non-hub carriers even have to reduce the prices as their market shares at major airports increase. This study contributes to the literature by explicitly segmenting the market into economy and premium classes. The results have important policy implications in terms of further deregulation of Chinese domestic market.

Item Type: Article
Subjects : Hospitality & Tourism
Divisions : Faculty of Arts and Social Sciences > School of Hospitality and Tourism Management
Authors :
NameEmailORCID
Chen, RUNSPECIFIEDUNSPECIFIED
Lei, Zhengzheng.lei@surrey.ac.ukUNSPECIFIED
Date : 5 July 2017
Copyright Disclaimer : © 2017. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Uncontrolled Keywords : Airport dominance, Airline pricing, Market power, Hub premiums, Chinese domestic market
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 04 Apr 2017 14:56
Last Modified : 31 Oct 2017 19:15
URI: http://epubs.surrey.ac.uk/id/eprint/813936

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