The Organization of Multiple Airports in a Metropolitan Area

Abstract

This study deals with the allocation of international and domestic flights (allocation of services) among multiple airports in a metropolitan area. We present a spatial model of the metropolitan area in which two airports provide services for two types of air transportation (international and domestic). The model describes the user's airport choice, competition among carriers, and the pricing and service choices of airport operators. We examine three types of airport operation: separate operation by two private firms (PP), integrated operation by a single private firm (M), and integrated operation by the government (G). By means of numerical simulations based on realistic parameter values, we obtained the following results: i) allocation of services vary depending on the location of airports and types of operation; ii) welfare gain from the regulation of service choice is relatively small compared to regulation of airport charges.