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Evolution of domestic traffic and fares at the top 200 US airports between 1990 and 2008

Author(s)
Ben Abda, Mehdi
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Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering.
Advisor
Peter P. Belobaba
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M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582
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Abstract
The main objective of this thesis is to analyze the evolution of domestic Origin- Destination (O-D) traffic and fares at the Top 200 airports in the United States between 1990 and 2008. The impetus behind this research is to shed light on the differences in trends between the largest and smallest, primary and secondary, hub and non-hub airports, and to measure the impact of Low Cost carriers (LCC) on traffic, fares and competition. Furthermore, case studies of five multi-airport systems located within major US metropolitan areas were performed to identify the trends shaping multi-airport systems. We find that domestic O-D passenger traffic at the Top 200 commercial airports in the United States increased by more than 52% between 1990 and 2005, but dropped by 2% from 2005 to 2008 because of the global economic downturn. Average fares at the Top 200 airports increased by 14% during the "golden 90s", decreased by 13% between 2000 and 2005, but rebounded by 16% between 2005 and 2008, as a result of soaring jet fuel prices and reduced capacity. Low Cost carriers' share of the total domestic O-D traffic in the US is still growing, although leveling off, reaching 34% in 2008. LCC entry focused initially on largest airports, then grew rapidly in second and third airport tiers. As a result, in 2008, 95 of the Top 200 airports had an LCC aggregated market share greater than 20%, up from 27 airports in 1990. We show that LCC's effective entrance or substantial growth at a particular airport had a significant impact lowering average fares and stimulating passenger volumes. However in recent years, this market stimulation effect has been leveling off, as the gap in average fares between LCC and Network Legacy carriers (NLC) has narrowed. Secondary airports played a critical role in accommodating the increase in demand for air traffic in the nation's largest metropolitan areas: They served 19.8% of the total domestic O-D passenger traffic in the 15 studied multi-airport systems in 2008, compared to 16.9% in 1990, highlighting their increasing importance. Finally, the airport concentration levels, as measured by the average weighted Herfindahl-Hirschman Index, increased by 8% during the studied period, demonstrating that the Top 200-airport sample is more concentrated in 2008 compared to 1990.
Description
Thesis (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2010.
 
Cataloged from PDF version of thesis.
 
Includes bibliographical references (p. 167-170).
 
Date issued
2010
URI
http://hdl.handle.net/1721.1/60795
Department
Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering.
Publisher
Massachusetts Institute of Technology
Keywords
Civil and Environmental Engineering.

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  • Civil and Environmental Engineering - Master's degree
  • Civil and Environmental Engineering - Master's degree

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