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Technological Innovation in the Airline Industry: The Impact of ...

Source: www.socsci.uci.edu
Topic: Airline Industry

Sort Desciption: vation in the airline industry, on service patterns and service quality. ... While the airline industry has experienced a number of significant ...

Content Inside: Technological Innovation in the Airline Industry: The Impact of Regional Jets by Jan K. Brueckner Department of Economics University of California, Irvine 3151 Social Science Plaza Irvine, CA 92697 e-mail: jkbrueck@uci.edu and Vivek Pai Department of Economics University of California, Irvine 3151 Social Science Plaza Irvine, CA 92697 e-mail: vpai@uci.edu February 2007 Abstract This paper explores the impact of the regional jet (RJ), an important new technological inno- vation in the airline industry, on service patterns and service quality. The evidence shows that RJs were used to provide service on a large number of new hub-and-spoke (HS) and point-to- point (PP) routes. In addition, they replaced discontinued jet and turboprop service on many HS routes, as well as supplementing continuing jet service on such routes. When replace- ment or supplementation by RJs occurred, passengers benefited from better service quality via higher flight frequencies. The paper’s theoretical analysis predicts that the frequency ad- vantage of RJs over jets, a consequence of their small size, should have led to the emergence of PP service in thin markets where such service was previously uneconomical. However, the evidence contradicts this prediction, showing that markets attracting new PP service by RJs had demographic characteristics similar to those of markets that already had jet PP service or attracted it after 1996. Technological Innovation in the Airline Industry: The Impact of Regional Jets by Jan K. Brueckner and Vivek Pai 1. Introduction While the airline industry has experienced a number of significant institutional innovations over the years, including the adoption of hub-and-spoke networks and frequent flier programs and the use of yield management techniques, true technological innovations have been less fre- quent. The most significant such innovation over the last fifty years was the emergence of the jet passenger aircraft in the 1960s. More recently ...

innovation in the airline industry

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