Study of the “hub premium” or instances of airport dominance that lead to super-competitive prices are prevalent in the airline economics literature. Early work theorized that it results from access (or exclusion) to airport facilities, frequent flyer programs, or bias from travel agents and computer reservation systems. Subsequent literature has focused on the first two factors and ignored the third. This thesis attempts to fill the gap in the literature by researching the effect of the internet as a moderating effect on the hub premium. Some evidence indicates that the pricing premium has declined since the 1990’s and 2000’s when most of the research was consolidated. We contend that decreased search costs and increased price and product transparency accruing from the internet could explain this decrease, however the results suggest this is not the case. A negative effect is found, but the results are unsubstantial, indicating that the internet has not played a significant role in decreasing the hub premium and that the other two factors in the literature are much more important market forces.

Additional Metadata
Thesis Advisor Y. Kerkemezos
Persistent URL hdl.handle.net/2105/49556
Series Business Economics
Citation
E.D. Heitzmann. (2019, November 11). EXAMINING THE MODERATING EFFECT OF THE INTERNET ON U.S. AIRLINE FARES AND THE PREMIUM AFFORDED TO DOMINANT AIRLINES. Business Economics. Retrieved from http://hdl.handle.net/2105/49556