Airport Capacity Investment With A Dominant Signatory Airline

The convenience of air transportation has won the favor of a great many consumers.However,the increasing traffic flow has also lead the air systems facing the congestion,flight delay and other issues.Based on the existing airport and airline’s contract relationship,in this thesis,we focus on studing the airport capacity investment strategy with a dominant signatory airline when demand is uncertain.By appling the “vertical Structure”,we establish a mathematical model to disscuss the investment strategy of the airport and the competition between the signatory airline and the non-signatory airline.Moreover,compared with the reference [15,39],which disscusses the airport investment choice in two different market structure,we make some comparisons of the obtained results among three different market structures,which will be benefit for the dessicion-maker.The content of the thesis is organied as follows:Firstly,in the chapter three,we apply the Stanclkberg Game to model the competition between the signatory airline and the non-signotary airline.By utilizing the conditions of the model,we finally obtain the optimal outputs of the two airlines.The finds show that the airline maket would shift from monopoly to douopply with the increase of the airport service fee.Thirdly,we define the profit function and the social wealfare function to study the airport service fee and the capcity choice when demand is uncertain.By using the optimization method,we obtain the optimal capacity for the private airport and the public airport when the varance - of (3 is small.In addition,when the varance - is large,we apply the numerical simulation to give its optimal capacity.For both the private and the public airport,the obtained results show that the optimal airport capacity and the corresponding profit or social welafare are decreasing with respect to the marginal cost and increasing with respect to the marginal reduced cost.Furthermore,when marginal cost of the capacity is large enough,the airline market would be monopoly with only one signatory airline.Finally,in chapert four,we present the results for the case with two signatory airlines and two non-signatory airlines in references [15] and [39],and give the optimal capacity for the airport with one signatory airline and one non-signatory airline when the demand (3 is deterministic.Compared these results with the results in Chapter 3,we obtained the best market structure under different condition in Chapter 5,which would be benefit to policy-maker.