Joint impact of airline market structure and airport ownership on airport market power and profit margin

Yap Yin Choo, Leonardo Corbo, Kun Wang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

12 Citations (Scopus)

Abstract

This paper investigates the joint impacts of downstream airline market structure, airport ownership structure, concession services, and low-cost carrier (LCC) presence on airport market power and profit margin. Lerner indexes for a sample of 61 major airports around the world were calculated for the period 2008–2014. Then, regression analysis was conducted to identify the determinants of the airport Lerner index. We find that a more concentrated downstream airline market would reduce the profit margin for a public airport but increase the profit margin for a private airport. A higher share of concession service is found to decrease the airport's overall profit margin (accounting for both aeronautical and concession services). Airports with significant LCC presence have a lower profit margin. Finally, the concentration in airline market is found to have a larger negative impact on airport aeronautical price than on the concession price.

Original languageEnglish
Pages (from-to)67-78
Number of pages12
JournalTransport Policy
Volume72
DOIs
Publication statusPublished - Dec 2018
Externally publishedYes

Keywords

  • Airline market structure
  • Airport
  • Airport ownership
  • LCC
  • Lerner index

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Transportation

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