1.Most large airlines operate networks, or hub-and-spoke systems, which connect many spoke cities (or nodes) with flights to and from a hub airport.

a.A network carrier serves 29 spoke cities and a single hub city.How many city-pairs does it serve?(A city-pair is City A to City B.A to B and B to A are considered just one city-pair):

b.This same airline adds a 30^thspoke city to its network using a 150 seat capacity aircraft.On a flight from this new 30^thspoke to the hub, how many passengers, on average, does it need to attract to each destination, including the hub, to achieve an 80% load factor?

c.How can a network airline profitably serve smaller cities whereas a low-cost-airline operating a point-to-point system cannot? (Hint:Consider 2b above).

d.A network carrier serves some small cities close to its hub with regional jets that have much higher seat-mile-costs (CASM) than larger mainline jets.The average fare from these cities to the hub does not cover fully allocated costs.Is this rational?

e.Networks are subject to negative externalities.How might such externalities affect a network carrier's decision to add another spoke city to its network?Explain.(You may wish to use marginal benefit/cost analysis).