An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers
Despite 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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Starkie, 2001. "Reforming UK Airport Regulation," Journal of Transport Economics and Policy, University of Bath, vol. 35(1), pages 119-135, January.
- Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
- Haugh, David & Hazledine, Tim, 1999. "Oligopoly Behaviour in the Trans-Tasman Air Travel Market: TheCase of Kiwi International," Working Papers 195, Department of Economics, The University of Auckland.
- Hooper, Paul, 2002. "Privatization of airports in Asia," Journal of Air Transport Management, Elsevier, vol. 8(5), pages 289-300.
- Windle, Robert & Dresner, Martin, 1999. "Competitive responses to low cost carrier entry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 35(1), pages 59-75, March.
- Gerald Granderson, 2000. "Regulation, Open-Access Transportation, and Productive Efficiency," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(3), pages 251-266, May.
- Tae Hoon Oum & Anming Zhang & Yimin Zhang, 2004. "Alternative Forms of Economic Regulation and their Efficiency Implications for Airports," Journal of Transport Economics and Policy, University of Bath, vol. 38(2), pages 217-246, May.
- Barrett, Sean D, 2000. "Airport competition in the deregulated European aviation market," Journal of Air Transport Management, Elsevier, vol. 6(1), pages 13-27.
- Francis, Graham & Fidato, Alessandro & Humphreys, Ian, 2003. "Airportâ€“airline interaction: the impact of low-cost carriers on two European airports," Journal of Air Transport Management, Elsevier, vol. 9(4), pages 267-273.
When requesting a correction, please mention this item's handle: RePEc:tpe:jtecpo:v:40:y:2006:i:3:p:425-447. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.