This analysis will examine the current structure of the domestic airline market to determine the amount of market power incumbent carriers wield, the market dynamics that exist in short haul and long haul routes, and the impact of a new breed of air carrier, the low-cost carrier, on the distribution of airfares. The analysis seeks to determine if a low-cost carrier’s presence on a route significantly impacts airfares. This paper argues that previous analyses may overestimate the effect of route concentration, hubs, and other route specific characteristics on the distribution of market prices. The emerging significance of the low-cost carrier may indicate a shift in the structure of the airline market away from hub-and-spoke networks and towards point-to-point networks. The significance of low-cost carriers suggests that government policies that enforce antitrust laws at hub airports may be ineffective; moreover, encouraging low-cost entry, through equal access to infrastructure, compacts the fare distribution and lowers the median fare.

Awarded:
Firestone Medal for Excellance in Research, Stanford University, 2003.
First Place Thesis, Stanford University Economics Department, 2003.

Published:
Stanford Economics Journal, MMIV Volume X.

Abridged SEJ Thesis [PDF] | Complete Thesis [PDF]

Charles R. Blyth Fund Investment Proposals

The following is a sample of analyst reports, written as a member of the Blyth Fund. A complete archive can be found at the Blyth Fund website: blythfund.stanford.edu.

Most documents can be viewed in PDF format.

Note that all documents included in and linked to from this site are copyrighted and may not be replicated or reproduced without written permission from the author. An important disclaimer with regard to the investment proposals should be read and can be found at the Blyth Fund Disclaimer page.

Copyright © 2003-2010 Charles Najda