Yale Journal of Economics Spring 2013

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curve relationship between capacity share and market share. Many of those passengers come to expect that the airline with the highest frequency will minimize the difference between the preferred and scheduled departure and arrival times and will tend to only consider that airline when making future bookings (Fruhan 1972). Because EAS communities support low frequencies, passengers may find that schedules at their local EAS airport are consistently inconvenient and stop considering it an option altogether, opting for an alternative airport instead. Additionally, the value of time saved driving from using the EAS airport could be diminished because service is limited to one or two hubs, limiting the number of destinations one can reach requiring only one connection. For example, a passenger today flying from Ely, Nevada to Hartford, Connecticut would be forced to make two connections to reach his or her destination as there is currently no nonstop service between Denver, Colorado (the designated hub for Ely’s EAS service) and Hartford on an airline with interline agreements.13 Moreover, even if Denver had nonstop service to Hartford on such an airline, it is possible that the low frequency of EAS service would make a connection to the Hartford flight impossible or would require a substantial layover. Because non-EAS airports are more likely than EAS airports to have service to multiple hubs, the number of destinations reachable within one connection is higher, making them more attractive. The type of aircraft used on EAS routes could also be a driver of market leakage. The routes are largely operated by Beech 1900 Turboprops, which seat 19 passengers and may drive customers away from EAS airports towards hubs that operate jet service, commonly perceived to be more comfortable and safer, even though this may not be the case in reality (Clark 2007).14 Moreover, aircraft with 19 or fewer passengers are not required to have a flight attendant on board, and thus the perceived quality of service is likely to be lower on these flights. If passengers’ 13 Southwest

Airlines operates nonstop service from Denver to Hartford, but does not currently have any interline agreements with other airlines, severely diminishing the attractiveness of connections. Without interline agreements, passengers must retrieve their checked baggage, recheck them for their next flight, retrieve their ticket for their next leg and re-clear security. 14 Sparks, Evan. “Unfree as a Bird,” The American, 3 Jan. 2007. http://www. american.com/archive/2007/january/unfree-as-a-bird/.

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