Airport and airline competition for passengers departing from a large metropolitan area

In this paper an airport and airline choice model, based on a nested multin omial legit model, is developed to investigate both airport competition and airline competition in a metropolitan area with multiple departure airport s. The model can be used to analyze the effects of, e.g., an improvement in accessibility of a specific airport in a metropolitan area. It is shown an alytically that if the frequency elasticity of demand is smaller than 1, un ique airfare-frequency and passenger-charge equilibria exist. Next, symmetr ic equilibria are derived analytically; their properties are also examined. Finally, asymmetric equilibria are derived numerically, while their proper ties are discussed as well, (C) 2000 Academic Press.