"An Analysis of Airport Pricing and Regulation in the Presence of Competition Between Full Service Airlines and Low Cost Carriers"

Despite the airport privatization and deregulation trend in recent years, whether or not the privatized or commercialized airports should be left unregulated is still an open question. Related to this issue, one question that has received a very little attention to date is if and how pricing behavior of unregulated airports affect downstream airline competition, especially the competition between airlines offering differentiated services such as the case of full service airlines (FSA) vis-a-vis low cost carriers (LCC). If the upstream monopoly (airport) hinders downstream (airline) competition, the welfare effects of the upstream unregulated monopoly may be much larger than initially suspected. This aspect of airport pricing has not been formally incorporated in the debate on airport price regulation. In this paper, we study a duopoly model to capture the differential competitive effects of changing airport user charges on FSAs and LCCs. By making reasonable assumptions on differential price elasticities, unit costs and competitive behavior as manifested by firmspecific conduct parameters, we perform numerical simulations to measure differential effects on an FSA and an LCC of increasing airside user charge by an unregulated upstream monopolist airport. Our analytical and numerical results suggest existence of the asymmetric effects of an airport's monopoly pricing on LCC and FSA. That is, LCCs suffer more from an identical cost increase than FSAs and are, therefore, more vulnerable to monopolistic pricing practices of an unregulated airport. This implies that unregulated airport pricing would reduce the extent of competition in downstream airline markets, and thus, cause a further detrimental effect on welfare over and above the first-order dead weight loss of airport's monopolistic pricing. Considering that LCCs have brought considerable reduction of average fares and the associated welfare gains, it is important for the governments to take into account of these asymmetric effects of increasing airport user charges on FSAs and LCCs when they consider the form and extent of regulation or deregulation. Although our model and simulation work deal specifically with the effect of airport pricing on downstream airline markets, our framework of analysis may be applicable to analysis of any policy affecting costs of FSAs and LCCs including security levies as well as potentially adaptable to other upstream-downstream industry cases.

"Choice of Air Cargo Transshipment Airport: An Application to Air Cargo Traffic to/from Northeast Asia"

Based on a unique data set of 760 air cargo transshipment routings to/from the Northeast Asian region in 2000, this paper applies an aggregate form of multinomial logit model to identify the critical factors influencing air cargo transshipment route choice decisions. The analysis focuses on the trade-off between monetary cost and time cost while considering other variables relevant for choice of transshipment airport. The estimation method considers the presence of unobserved attributes, and corrects for resulting endogeneity via a two-stage least squares estimation using instrumental variables. Our empirical results show that choice of air cargo transshipment hub is more sensitive to time cost than the monetary costs such as landing fees and line-haul price. For example, our simulation results suggest that a one-hour reduction in total transport and processing time for a particular O-D air cargo traffic would be more effective than a US$1,000 reduction in airport charges. This suggests that it is important to reduce air cargo connecting time at an airport via adequate investment in capacity and automation even by increasing landing and other airport charges.

The Conference Proceedings of the 1998 Air Transport Research Group (ATRG) of the WCTR Society

Thirteen papers (presentations) from the 8th World Conference on Transportation Research are presented. Topics include European Airline competition, cost analyses, performance evaluations, deregulation; aviation policy in Southeast Asia; corporate involvement in European business transportation; and cycles in the airline industry

Key Findings of 2012 ATRS Global Airport Performance Benchmarking Project

The ATRS Global Airport Benchmarking Project measures and compares the performance of several important aspects of airport operations: Productivity and efficiency, unit costs and cost competitiveness, financial results and airport charges. The report also examines the relationships between various performance measures and airport characteristics as well as management strategies in order to provide a better understanding of observed differences in airport performance. This report includes 183 airports and 25 airport groups of various sizes and ownership forms in Asia Pacific, Europe and North America. This presentation highlights key findings on efficiency and cost

Key Findings of 2011 ATRS Global Airport Performance Benchmarking Project

The ATRS Global Airport Benchmarking Project measures and compares the performance of several important aspects of airport operations: Productivity and efficiency, unit costs and cost competitiveness, financial results and airport charges. The report also examines the relationships between various performance measures and airport characteristics as well as management strategies in order to provide a better understanding of observed differences in airport performance. This report includes 156 airports and 19 airport groups of various sizes and ownership forms in Asia Pacific, Europe and North America. This presentation highlights key findings on efficiency and cost

Key Findings: 2014 ATRS Global Airport Performance Benchmarking Project

The ATRS Global Airport Benchmarking Project measures and compares the performance of several important aspects of airport operations: Productivity and efficiency, unit costs and cost competitiveness, financial results and airport charges. The report also examines the relationships between various performance measures and airport characteristics as well as management strategies in order to provide a better understanding of observed differences in airport performance. This report includes 200 airports and 26 airport groups of various sizes and ownership forms in Asia Pacific, Europe and North America. This presentation highlights key findings on efficiency and cost

Efficiency Benchmarking of North American Airports: Comparative Results of Productivity Index, Data Envelopment Analysis and Stochastic Frontier Analysis

Using three common methodologies for measuring airport efficiency, namely the productivity index method, Data Envelopment Analysis (DEA) method, and stochastic frontier analysis (SFA) method, this study examines the efficiency performances of 62 Canadian and U.S. airports. Unlike most previous studies, this study includes aeronautical and non-aeronautical outputs of airports as they are inexplicably tied to each other in airport production. The empirical results reveal that the efficiency scores and rankings measured by these alternative methods are quite similar to each other in the top 15 and bottom 15 ranked airports, whereas considerable differences exist among the airports in the middle range. We also found that the percentage of non-aeronautical revenue, passenger volume, average aircraft size, percentages of international and connecting traffic significantly affect our airport efficiency estimates in all of the three alternative approaches used

\u3ci\u3eThe Conference Proceedings of the 1997 Air Transport Research Group (ATRG) of the WCTR Society, Vol. 1, No. 1\u3c/i\u3e

UNOAI Report 97-2https://digitalcommons.unomaha.edu/facultybooks/1123/thumbnail.jp

Key Findings: 2013 ATRS Global Airport Performance Benchmarking Project

The ATRS Global Airport Benchmarking Project measures and compares the performance of several important aspects of airport operations: Productivity and efficiency, unit costs and cost competitiveness, financial results and airport charges. The report also examines the relationships between various performance measures and airport characteristics as well as management strategies in order to provide a better understanding of observed differences in airport performance. This report includes 195 airports and 26 airport groups of various sizes and ownership forms in Asia Pacific, Europe and North America. This presentation highlights key findings on efficiency and cost

\u3ci\u3eThe Conference Proceedings of the 1997 Air Transport Research Group (ATRG) of the WCTR Society Vol. 2, No. 2\u3c/i\u3e

UNOAI Report 97-6https://digitalcommons.unomaha.edu/facultybooks/1159/thumbnail.jp