Transportation Research Part B: Methodological
This study examines hub-airport congestion pricing and capacity investment using a simple hub-spoke network model, in which hub-carrier scheduling causes both schedule delays and congestion delays. The “fixed-proportion assumption” is removed. We find the following. (i) A public hub airport requires both per-flight charges, which must be movement-related but cannot be weight-related, and discriminatory per-local and per-connecting passenger charges to reach the first-best outcome. (ii) Either weight-related per-flight charges or the marginal-operating-cost (MOC) pricing on local and/or connecting passengers cannot reach the first-best. (iii) First-best charges can lead capacity investment to be socially efficient. However, weight-related per-flights charges result in under-investment, whereas the MOC pricing results in over-investment in runway capacity. (iv) Private hubs that charge positive movement-related per-flight charges subsidize passengers through per-passenger charges. Finally, (v) movement-related per-flight charges lead private hubs to overinvest, whereas weight-related per-flight charges lead to either over- or under-investment.
Journal of Transport Economics and Policy
This paper studies airlines' choices of flight frequency and aircraft size when passenger demand grows over time. The analysis shows that, when there are economies of operating larger aircraft, airlines would increase the number of flights, but not necessarily increase aircraft size to accommodate traffic growth. On the other hand, when there are no economies of operating larger aircraft, airlines would prefer operating larger aircraft to increasing the number of flights. The effect is stronger if the economies of aircraft size are more significant. These results hold whether airport charges are weight-based or flight-based, and are set exogenously or endogenously.