Hub-and-Spoke System in Air Transportation and Its Implications to Regional Economic Development-A Case Study of United States

Considerable changes have taken place in commercial passenger air transport since the enactment of the 1978 Airline Deregulation Act in the US and the deregulation of airline networks that has occurred elsewhere. The commercial and operational freedoms have led most of the larger carriers to develop hub-and-spoke networks, within which certain cities or metropolitan areas emerge as key nodes possessing tremendous advantages over other locations in the air transport system. This paper examines the nature of hub-and-spoke operations in air transportation services, and the benefits that accrue to a city or geographical region that is host to an airline hub. In particular, it looks into linkages between the air service hub and local economic development. Four potential types of impact of airports on the regional economy are defined and discussed. As an example, the assessment of the economic impacts of Cincinnati-Northern Kentucky International Airport (CVG), a major Delta Airlines hub, is introduced.