Air Hubs and Market Fragmentation at Chicago

Air Hubs and Market Fragmentation

Source: adapted from R. Baseler (2003) “Market Outlook for Air Travel: A Global Perspective”, 2nd Annual MIT Airline Industry Conference, Washington DC.

Before deregulation and Open Skies agreements, only a few international city-pairs could be serviced. The unavailability of lower capacity aircraft for long ranges also meant that only the largest city-pairs could be serviced, often with just one daily service.

Deregulation and the introduction of smaller wide-body long-range aircrafts such as the Boeing 767 (1982, about 250 passengers), the Boeing 777 (1995, about 350 passengers), and the Airbus A330 (1994, about 300 passengers) permitted a wider range of city-pairs to be serviced and involving cities of smaller size.

With technical and regulatory changes in air travel, Chicago has evolved from being a domestic hub to assume the function of a major international hub. The fact that Chicago became a hub enabled the consolidation of a larger number of passengers bound to various European cities.