An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers
AbstractDespite the increasing trend of airport privatisation and deregulation in recent years, few studies have analysed how the pricing behaviour of unregulated airports affects downstream airline competition, especially the competition between airlines offering differentiated services such as the case of full service airlines (FSA) vis-à-vis low cost carriers (LCC). In this paper, a duopoly model is used to analyse and capture the differential competitive effects of changing airport user charges on FSAs and LCCs. Numerical simulations and sensitivity tests are performed in order to measure such differential effects. The analytical and numerical results found the existence of asymmetric effects of an airport's monopoly pricing on LCC and FSA. It is important for governments to take account of asymmetric effects when considering the form and extent of regulation or deregulation. © 2006 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.
Volume (Year): 40 (2006)
Issue (Month): 3 (September)
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Web page: http://www.bath.ac.uk/e-journals/jtep
Other versions of this item:
- Tae Hoon Oum & Xiaowen Fu & Mark Lijesen, 2005. "An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers," CIRJE F-Series CIRJE-F-316, CIRJE, Faculty of Economics, University of Tokyo.
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- Germá Bel & Xavier Fageda, 2009. "Factors Explaining Charges in European Airports: Competition, Market Size, Private Ownership and Regulation," Working Papers 2009-31, FEDEA.
- Li, Zhi-Chun & Lam, William H.K. & Wong, S.C. & Fu, Xiaowen, 2010. "Optimal route allocation in a liberalizing airline market," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 886-902, August.
- Hangjun Yang & Anming Zhang, 2011. "Price-cap regulation of congested airports," Journal of Regulatory Economics, Springer, vol. 39(3), pages 293-312, June.
- Hideki Murakami, 2012. "Dynamic Effect of Low-Cost Entry on the Conduct Parameter: An Early-Stage Analysis of Southwest Airlines and America West Airlines," Discussion Papers 2012-25, Kobe University, Graduate School of Business Administration.
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