Abstract
This paper deals with the price competition between airports and its effect on airline (carrier) networks. We construct a model that includes the following two features: (i) the carrier can choose its network configuration (point-to-point or hub-spoke) and (ii) airport operators can compete for airport charges by considering the carrier׳s choice. By utilizing this model, we address the question of how airport competition affects the carrier׳s network choice. The results show that the price competition of airports forces the carrier to choose an airport at a relatively small city as the network hub. Furthermore, the private operation of airports disturbs the formation of a hub-spoke network.
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