Searching for the sweet spot: The determinants of direct services from Canadian airports

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Searching for the sweet spot: The determinants of direct services from Canadian airports

Hazledine, Tim

Abstract In markets for scheduled passenger travel services, demand may be not independent of supply. On airline routes the speed, convenience and frequency of services affect demand along with price and other economic factors. This generates the possibility of multiple equilibria. For 185 domestic Canada and trans-border city-pair routes, of which 101 currently lack non-stop service, we find that twelve of the latter (all trans-border routes) have a “sweet spot” – although current passenger numbers do not justify non-stop service, were this to be introduced, it would turn out to be economically justified by the boost in the attractiveness of the route.

Highlights • Demand for passenger air travel is partially determined by supply. • This generates possible multiple equilibria. • Some routes without direct (non-stop) service could support such economically.