Abstract
This study investigates the effects of airport-airline vertical arrangements on airport capacity choices under demand uncertainty. A multi-stage game is analysed, in which competing airlines contribute to capacity investments and share airport revenues. Our analytical results suggest that for a profit-maximising airport, such a vertical arrangement leads to higher capacity but may not increase its profit, whereas for a welfare-maximising airport, such an arrangement has no effect on capacity or welfare. Capital cost savings brought by airport-airline cooperation, if any, always lead to higher capacity, and to higher profit for a profit-maximising airport and higher welfare for a welfare-maximising airport. Numerical simulations reveal that win-win outcomes may be achieved for an airport and its airlines without government intervention.
| Original language | English |
|---|---|
| Pages (from-to) | 298-309 |
| Number of pages | 12 |
| Journal | Transportation Research Part A: Policy and Practice |
| Volume | 92 |
| DOIs | |
| Publication status | Published - 1 Oct 2016 |
| Externally published | Yes |
Keywords
- Airport capacity
- Airport-airline vertical arrangement
- Demand uncertainty
ASJC Scopus subject areas
- Civil and Structural Engineering
- Transportation
- Management Science and Operations Research