ABSTRACT
Following the deregulation of the US aviation markets in 1978, a number of studies on airline cost functions emerged (for example, Caves et al., 1984; Gillen et al., 1990; Brueckner and Spiller, 1994; and Baltagi et al., 1995). These studies all concluded that airlines operate under economies of density, and thus supported the theoretical result that density economies are an important driver for the success of hub-and-spoke networks.
