Airport-airline vertical relationships, their effects and regulatory policy implications

Xiaowen Fu, Winai Homsombat, Tae H. Oum

Research output: Journal article publicationJournal articleAcademic researchpeer-review

63 Citations (Scopus)

Abstract

This paper examines the forms and effects of vertical relationships between airports and airlines with a focus on the North American and European aviation markets. We find that such vertical relationships enables those participating to achieve various benefits and may be formed as a competitive response to other competing airport-airline alliances. In some cases, vertical airport-airline relationships strengthen the hub status of major airports, leading to increased employment and service quality in local markets. On the other hand, preferential treatment of a particular airline by an airport may enhance that airline's market power, allowing it to dominate the airport and charge hub premiums. The competition and welfare implications of airport-airline vertical alliances can be complicated and two-sided, subject to the influences of other factors such as the market structures of the airline and airport markets.

Original languageEnglish
Pages (from-to)347-353
Number of pages7
JournalJournal of Air Transport Management
Volume17
Issue number6
DOIs
Publication statusPublished - 1 Jan 2011

Keywords

  • Airport economics
  • Airport-airline relationship
  • Vertical cooperation

ASJC Scopus subject areas

  • Transportation
  • Strategy and Management
  • Management, Monitoring, Policy and Law
  • Law

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