Impact of Low Cost Carriers and Multiple Airport System

Abstract

This paper estimates the impact of the entrance of low cost carriers on the Eastern Asia international passenger transport markets, especially to the high density short-haul markets, and discusses the efficient management policy of a multiple airport system. We apply a bi-level air transport market model to Osaka-Korea international passenger transport market, and estimate the impact of entrance of low cost carriers. The results suggest that the entrance of LCC improves passenger’s utility, but the profit of legacy carriers is significantly reduced. We also evaluate the slot allocation policy of Osaka-Itami International Airport. Finally we find that the policy used in Osaka-Itami is useful for protecting the legacy carrier's share, but this effect disappears with the increase of passenger's sensitivity to airfare.