運輸經濟學 CASE STUDY-CONCENTRATION IN THE US AIRLINE INDUSTRY

1. 運輸經濟學CASE STUDY-CONCENTRATION IN THE US AIRLINE INDUSTRY 美國航空產業的集中化 班級：航管三甲 姓名：吳佳宏 學號：1095408008

2. As another example of concentration rations, consider the airline industry and the effect on concentration in the industry from economic deregulation in 1978. We have seen that, by enabling airline companies to freely set prices and eliminating route restrictions, the 1978 Airline Deregulation Act provided airline companies with an incentive to rationalize its operations through the development of hub-and-spoke passenger distribution networks. For present purposes, we can ask whether airline hubbing has led to greater or less concentration in the industry. As is often the case, the answer depends upon how we look at the industry.

3. Table7.4 Concentration ratios in the domestic passenger airline industry. 1977-90 ─────────────────────────────────── Year Four-Firm Ratio(%) Eight-Firm Ratio(%) HHI 1977 56.2 81.1 1,060 1982 54.2 80.4 930 1987 64.8 86.5 1,230 1990 61.5 90.5 1,210 ─────────────────────────────────── Source：Adapted from Borenstein (1992).table 1. p.47 Between 1977 and 1982, concentration in the industry initially fell, which is consistent with firm entry in the years immediately after economic deregulation. However, from 1982 to 1990, each measure denotes increased concentration in the industry. There was a 13.5%, 12.5%, and 30.1% increase in the four-firm, eight-firm, and HHI respectively. As in the LTL sector, the airline industry market structure lies somewhere between a loose oligopoly and tight oligopoly.

4. Table 7.5Average city-pair Hirschman-Herfindahl indices in the domestic passenger airline industry. 1984-90 ─────────────────────────────────── Marker Distance (miles) ─────────────────────────────────── Year 0-200 201-500501-1,0001,000-1,500>1,500All Direct flights only 1984 601 598 601 581 536 590 1987 691 648 612 587 532 620 1990 612 641 672 625 536 632 All flights 1984 600 588 537 479 415 531 1987 689 616 498 444 363 512 1990 618 614 518 424 357 506 ─────────────────────────────────── Source：Adapted from Borenstein (1992). Table 2. p.49

5. In order to see further into the industry's market structure and the extent of competition, consider table 7.5, which reports average HHIs for city-pairs for all trips and separately for direct flights. The indices are also reported by distance between cities. First, in comparison with the HHIs reported in table 7.4, the indices in table 7.5 are considerably lower. Second, what is the effect of hubbing on direct flights that do not involve a change of plane? By having more passengers pass through its hub, the airline increases its load factors and the frequency of direct flights between the hub and other cities. Combined with the fact that most airports have the physical capacity to accommodate one or at most two hubs, this suggests that hubbing has increased market concentration for direct flights into and out of the hub. From the table, the greatest impact on concentration occurs in the medium-length trips ranging from 200 to 1500 miles.

6. Third, what effect has hubbing had on concentration if we consider flights on which passengers must change planes? As mentioned above, hubs enable airlines to funnel more passengers through its hub for distribution to other flights, which oftentimes involves a change of plane. The benefit is that the airline is now able to service many more city-pairs. In that most long-distance flights involve a change of plane, this implies that we will see decreased concentration on long-distance flights and increased concentration on short-distance flights. Generally consistent with table 7.5, Morrison and Winston (1995) analyzed fare premiums at 15 hub airports and found that the highest premia, at 10%, occurred during the 1988-90 period. Subsequently, these premia have fallen by 4-7%, and in 1993 they were estimated at 5.2%.