An analysis of airport pricing and regulation in the presence of competition between full service airlines and low cost carriers

Xiaowen Fu, Mark Lijesen, Tae H. Oum

Research output: Journal article publicationJournal articleAcademic researchpeer-review

58 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)425-447
Number of pages23
JournalJournal of Transport Economics and Policy
Volume40
Issue number3
Publication statusPublished - 1 Sep 2006
Externally publishedYes

ASJC Scopus subject areas

  • Transportation
  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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