In this paper, we study airport decisions on pricing and capacity investment with both aeronautical and concession operations. In addition, the airport under consideration is serving air carriers who have market power. We find that a profit-maximizing airport would over-invest in capacity in the...

This paper develops a theoretical model to investigate the effect of airline alliances on market outcome for fairly general demand and cost specifications. Two typical alliance types are examined: complementary and parallel alliances. The complementary alliance refers to the case where two firms...

This paper deals with the socially optimal pricing of airports in a hub-and-spoke network, taking into account explicitly the fact that demands for airport services at hub airport and spoke airports are complementary. It is shown that a welfare gain is to be made by switching from the regime of...

Operating lease of the aircraft gives the airlines flexibility in capacity management. However, airlines pay a risk premium to the leasing companies for bearing part of the risks. Therefore, the airlines face a trade-off between flexibility of capacity and higher costs. This paper develops a...

This paper extends the literature on airport congestion pricing by allowing carriers to price-discriminate between the business and leisure passengers when operating costs are the same for all passengers. The main results are: First, the second-best discriminating business fare exceeds the...

This paper analyzes pricing and slot-allocation mechanisms to manage airport capacity when profits are important to an airport, owing to budget constraints or profit maximization. We find that congestion pricing and slot trading/slot auctioning do not lead to the same results. Total traffic is...

This paper analyzes the effects of cooperation between a hub-and-spoke airline and a high-speed rail (HSR) operator when the hub airport may be capacity-constrained. We find that such cooperation reduces traffic in markets where prior modal competition occurs, but may increase traffic in other...

This study analyzes the effects of demand uncertainty on airport capacity choices. It shows that demand uncertainty will not change optimal capacity choice if demand variation is low and capacity cost is high; otherwise the optimal airport capacity under demand uncertainty will be larger than...

This paper explores the effect of airline emissions charges on airfares, airline service quality, aircraft design features, and network structure, using a detailed and realistic theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in...

This paper investigates the effects of concession revenue sharing between an airport and its airlines. It is found that the degree of revenue sharing will be affected by how airlines' services are related to each other (complements, independent, or substitutes). In particular, when carriers...