In airline networks, a link creates profits for its carrier in conjunction with the carrier’s other links. In other words, a link has “network” value. One prominent mechanism behind this network value is a hubbing effect: adding one single link to a hub creates many connecting routes. This paper studies a different and less explored mechanism of network value. It relies on the observation that passengers generally prefer a higher flight frequency (mainly because it provides more flexible options for travel times). Specifically, when a carrier adds a link, the created connecting routes will increase the traffic densities on adjacent links. As the carrier raises flight frequencies to meet the higher densities, there creates a positive effect on demand. By structurally estimating a model that incorporates this mechanism, I am able to quantify the density effect. It is found to be about 3.8 times as large as the hubbing effect. Furthermore, the model shows that the competitive impact of an airline entry (i.e., adding a new link) goes greatly beyond the local city-pair market where the entry happens.

中文翻译：

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航空公司网络，交通密度和链接价值

在航空公司网络中，链接与运营商的其他链接一起为运营商创造利润。换句话说，链接具有“网络”值。该网络价值背后的一个突出机制是集线效应：将一个链接添加到集线器会创建许多连接路由。本文研究了一种不同且鲜为人知的网络价值机制。它依赖于这样的观察：乘客通常偏爱较高的飞行频率（主要是因为它为旅行时间提供了更灵活的选择）。具体来说，当运营商添加链接时，创建的连接路线将增加相邻链接上的流量密度。随着航母提高飞行频率以满足更高的密度，这会对需求产生积极影响。通过结构上评估包含此机制的模型，我能够量化密度效应。发现它大约是集线效果的3.8倍。此外，该模型显示，航空公司进入（即添加新的链接）的竞争影响远远超出了发生进入的本地城市对市场。