Aviation Technology and Air Traffic Networks

Advisor: Pedro Carvalho Loureiro de Souza

Co-advisor: Leonardo Rezende

This paper studies to what extent the development of new aircraft shapes airlines' network structure. I argue that modern aircraft are more efficient and well suited to operate flights between smaller and less central cities, hence favoring the service of more markets in the periphery of the network. Using U.S. air traffic data, I employ a discrete choice framework to model airlines' entry decisions and the subsequent aircraft choice to each market. Counterfactual experiments show that had aircraft technology ceased to improve in 1999, the air traffic network as a whole would be more centralized, airlines would be operating more hub-centered networks, reaching fewer cities, and serving fewer markets

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