Examining cost distance by comparing airfares of network carriers and low-cost airlines: The case of Budapest

Abstract

In the second half of the 20th century, the development of transport and information technologies have had a profound impact on people’s mobility, changed the geographical and time constraints of the flow of goods and information, intensifying the relationship between cities and making those more complex.

Our research focuses on the different business models of network carriers and low-cost carriers and how they form and modify space. We seek to understand how the bankruptcy of Malév and the proliferation of low-cost carriers are changing Budapest’s air accessibility and cost distance by altering its air-traffic connections.

The mapping of changes in spatial relations and cost accessibility requires the use of alternative distance concepts (e.g. cost distance, time distance), because as technology advances, the distance between two points in space is no more determined by physical distance but by the time and cost required to cover these distances. Thus the quantification and measurement of the cities’ spatial relations requires the analysis of cost distance and time distance values derived from air traffic data.

This research aims to compare and map the cost distance of cities, considering the different business models of both network carriers and low-costcarriers. Using quantitative research methods and internet-based automated data query we worked out a data mining and GIS based mapping method which helps to visualise cost distances between European cities and Budapest, and demonstrate the spatial relationship between them.

We found that after the bankruptcy of Malév, the share of low-cost carriers rose from 26 per cent to over 50 per cent, and the beneficiaries of this transformation were clearly those who want to travel cheap, because our results showed that low-cost carriers offered in almost all cases cheaper tickets from Budapest to European destinations than network carriers.

Our findings also underscored that choosing the right booking time (Choice: 2 weeks, 1 month or 3 months) we can travel for the best price if we book tickets one month in advance. Relative to the booking date, ticket prices showed a U-shaped curve and not a steadily increasing or decreasing trend. To draw more detailed conclusions, further time series analysis is needed.

The cost distance analysis revealed that cities accessible from Budapest by low-cost carriers show decisively positive shifts, so these cities moved “closer” to Budapest in relative (cost) terms, than their geographical distance would imply. In contrast, the cost distance maps of the network carriers show mixed results due to higher airfares, but negative shifts of European destinations predominate.

The disappearance of Malév affected the Western European route network of Budapest only marginally, as the number of directly accessible destinations decreased mainly in Southeast Europe. Thus Budapest is still well connected to the European hub airports – which showed good cost distance values during the study – so the city is still an integral part of the global flow systems.