Airport congestion delays and airline networks

This paper investigates the role of airport congestion delays in the network choice of a monopoly airline. By comparing a hub-and-spoke network (HS), a point-to-point network (PP) and a mixed network (MX), we find the following. First, the optimal total flight frequency may be higher under HS than PP. Moreover, because of the inclusion of congestion delays, the optimal aircraft size is smaller under HS than PP, and the airline may choose PP even when the extra travel time disutility of one-stop services is relatively low. Finally, welfare analysis shows the airline's inefficient bias towards PP.