Airline Deregulation and the Choice of Networks

/n this paper, we explore how incumbent airline firms restructure their route network in order to deter entry caused by deregulation. We demonstrate that under the threat of entry, following market deregulation, incumbent airline firms are more likely to operate hub-and-spoke type networks. In doing so, the firms will increase the frequency of service compared with a fully-connected type network case. Consequently, consumers' welfare will rise with deregulation