The main aims of this books are to (a) assess and quantify the impact of U.S. air carrier network changes over the last 20 years; (b) develop an economic model of the airline firm taking explicit account of the role of network structure and organisation; (c) empirically test the model and use it to assess the relative efficiency of routes within a major U.S. carrier`s domestic system. Statistical measures such as the Gini index and entropy measure are used to assess changes in U.S. carrier networks from 1969-88. The economic model of the airline firm incorporates Gravity model estimates of potential air traffic flows on each route as a `network variable`. By specifying a spatial autoregressive form for the model, the interdependence of each route (and accordingly, the indirect/connecting passenger potential) may be included. The model is tested using an extensive route by route data set obtained from Continental Airlines for the year 1987/88. Using frontier production functions, technical efficiency of the routes is evaluated and the characteristics of efficient and inefficient routes are described. In the book, the key role of the airline's network is high- lighted and readers are offered a new view of the firm which focuses this important component
