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Page 5 of 7
The legacy carrier-dominated market of DFW -
ORD showed signs of resiliency after September
11, 2001. With prediction
errors of 9.88% before Q3, 2001, 16.82% during Q3, 2001 to Q2, 2002, and 10.7%
from Q3, 2002 to Q3, 2005, the effects of September 2001 on passenger boardings
is relatively small; however, this is largely due to the decrease in fares over
the period. In Q2, 2001, the average
non-stop fare was $285, yet in subsequent years that number drops to $252,
$225, $204 and finally the lowest value of $197 in Q2, 2005. With capacity remaining constant and fares
decreasing in such a manner, profitability of this route would be severely
impacted. This route is similar to many
non-stop routes across the U.S.,
since both American and United Airlines are offering service from a hub. Since the vast majority of domestic routes
originate or terminate at a hub, the same conclusions can be loosely applied to
each. The DFW - MDW route showed a
stronger correlation between its non-stop fare and total non-stop passengers
(.23) compared to the DFW - ORD route (.09), and is indicative of low cost
carrier American Trans Air's presence in that market. Once again, the fares of a competing market
have a larger impact on passenger boardings than the fares of the actual market
being tested. In this case, American
Trans Air is dictating ticket prices on all markets between Dallas and Chicago.
September
11, 2001, adversely affected each route to some degree, however
none as much as the LGA - DCA market.
Even though the overall effects were muted on strong business markets
such as this one, this route was subject to one major restriction that no other
market in this research was, the closure
of the DCA airport in Q3, 2001. This
also affected the integrity of the neural network predictions, in that before
Q3, 2001, the network had no data from which to predict how the route would
react to such a closure. Also, after the
effects of September 11 were compensated for, the original data during that
time period was used to predict future boardings, which it did not do very well. Once again, fares did not show a strong
correlation and an excellent example of this is between Q1 and Q2, 2005, when
fares jumped from $128 to $139 with no increase in capacity and resulting in an
overall increase in passengers from
264,870 to 321,940. The increase in
passengers after an increase in fares seems to suggest that a separate factor
other than what was used in this study was influential in the route's passenger
boardings.
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