Effects of concession revenue sharing contracts and airline alliances in airport competition

Adrián Nerja

No 317, Discussion Papers in Economic Behaviour from University of Valencia, ERI-CES

Abstract: In the last decades the number of airports has grown substantially leading to situations where two or more airports share the same catchment area. On the other hand, the airlines market has been partially deregulated which has intensifi ed competition. All of these have motivated the formation of controversial vertical agreements as they raise possible anticompetitive issues. This paper considers a type of vertical agreement, concession revenue sharing contract, to analyze how airport-airline vertical structures compete for passengers when they share a catchment area. The analysis distinguishes the e ect of ownership structure of airports. Parallel alliances in the airlines market are also considered. Our results point out that airports have incentives to share the whole concession revenues, and that parallel alliances may improve Social Welfare. These results have policy implications because this kind of contract encourages Social Welfare, so they should to be leniently looked, just as the formation of alliances.

Keywords: Concession revenues; Revenue shraing; Airport competition; Airport-airline vertical cooperation; Parallel alliances. (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-com and nep-tre
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:dbe:wpaper:0317

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