Integrators’ Air Transport Networks in Europe

Integrators are shipping carriers that control complete air and road delivery networks and offer a wide range of package delivery services. Despite the increasing relevance of small package delivery services in the European air transport market, very little has been written on integrated carriers’ air transport networks on the Old Continent. In this paper we examine the network configurations of DHL, FedEx, TNT, and UPS in terms of hubs, spokes, and market shares. Our results show that integrators operate hub-and-spoke networks. Network indices and centrality measures confirm that their network structures are more similar to those of full-service passenger carriers rather than those of low-cost carriers. However, the nature of their hub-and-spoke systems is different because freight tons, as compared to passengers, are more easily flown along multiple-stop and circular routes. As a consequence, FedEx, TNT, and UPS operate non-pure star networks with a dominant central hub and a set of intermediate airports acting as stops between the central hub and (usually) one “external airport”. DHL operates a multi-hub architecture, with a main dominant hub in Leipzig and a set of “secondary hubs” that provide several connections to other network nodes. Furthermore, we provide evidence of the most important intra-Europe and long-haul routes for each integrator, showing that DHL seems to have a more developed Europe-Asia connection, and is the only integrator to connect Europe to Sub-Saharan Africa. Finally, we show the high degree of complementarity existing between FedEx and TNT networks and that such complementarity is confirmed also by an analysis of their market shares in the different European sub-markets. Despite the significant level of market concentration, our analysis shows that the recent merger between FedEx and TNT is not expected to significantly modify market equilibrium in Europe.