New potential hubs in the South-Atlantic market. A problem of location

Abstract

Hub-and-spoke networks have become very popular in the airline industry. In this paper we study the potential hub candidates in the South-Atlantic market if a future process of liberalization creates a common air market area between South America and Europe. The analysis is based on the principal operating strategies that airlines consider when they choose their network configuration: central location in the market, local traffic at the hub cities and airport facilities. Traffic levels, great circle distances between the airports and other variables are used to analyze possible differences among airports. Other implications concerning the agents involved like gains in frequencies, time penalties and burden of capacity are also explored. Results of the analysis are used to extract some policy considerations and to stimulate discussion by government officials, air industry analysts and academics, about the necessity of the introduction of more liberalized measures in emergent markets. © 2003 Elsevier Science Ltd. All rights reserved.