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Airport partial and full privatization in a multi-airport region: Focus on pricing and capacity

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  • Noruzoliaee, Mohamadhossein
  • Zou, Bo
  • Zhang, Anming

Abstract

This paper studies the capacity and pricing choice of two congestible airports in a multi-airport metropolitan region, under transition from a pure public, centralized airport system to partial or full privatization. We develop analytical models to investigate three privatization scenarios: public–private duopoly, private–private duopoly, and private monopoly. We find that, airports follow the same capacity investment rule as prior to privatization when capacity and pricing decisions are made simultaneously. Pricing rule after privatization becomes more complicated, with additional factors having an upward effect on the privatized airport(s) and a downward effect on the remaining public airport.

Suggested Citation

  • Noruzoliaee, Mohamadhossein & Zou, Bo & Zhang, Anming, 2015. "Airport partial and full privatization in a multi-airport region: Focus on pricing and capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 45-60.
    • Handle: RePEc:eee:transe:v:77:y:2015:i:c:p:45-60
    DOI: 10.1016/j.tre.2015.02.012
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    4. Xu, Fangzhou & Hanaoka, Shinya & Onishi, Masamitsu, 2019. "Multi-airport privatization in a Japanese region with trip-chain formation," Journal of Air Transport Management, Elsevier, vol. 80(C), pages 1-1.
    5. Sun, Xiaoqian & Wandelt, Sebastian & Hansen, Mark & Li, Ang, 2017. "Multiple airport regions based on inter-airport temporal distances," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 84-98.
    6. Li, Shuai & Cai, Jiannan & Cai, Hubo, 2019. "Infrastructure privatization analysis: A public-private duopoly game," Transport Policy, Elsevier, vol. 83(C), pages 80-87.
    7. Wan, Xi & Zou, Benteng, 2024. "Multi-product airport competition and optimal airport charges," Research in Transportation Economics, Elsevier, vol. 103(C).
    8. Aguirre, Julio & Mateu, Pedro & Pantoja, Chrissie, 2019. "Granting airport concessions for regional development: Evidence from Peru," Transport Policy, Elsevier, vol. 74(C), pages 138-152.
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    10. Xi Wan & Benteng Zou, 2020. "Airport Competition in Two-sided Markets," DEM Discussion Paper Series 20-01, Department of Economics at the University of Luxembourg.
    11. Hu, Rong & Huang, Mengyuan & Zhang, Junfeng & Witlox, Frank, 2023. "On the Matthew effect in a multi-airport system: Evidence from the viewpoint of airport green efficiency," Journal of Air Transport Management, Elsevier, vol. 106(C).
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    13. Álvarez-SanJaime, Óscar & Cantos-Sanchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2021. "The effect of cooperative infrastructure fees on high-speed rail and airline competition," Transport Policy, Elsevier, vol. 112(C), pages 125-141.
    14. Li, Shuai & Cai, Hubo, 2017. "Government incentive impacts on private investment behaviors under demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 115-129.
    15. Xu, Fangzhou & Hanaoka, Shinya, 2021. "Effects of airport terminal competition: A vertical structure approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    16. Rolim, Paula S.W. & Bettini, Humberto F.A.J. & Oliveira, Alessandro V.M., 2016. "Estimating the impact of airport privatization on airline demand: AÂ regression-based event study," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 31-41.
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