Topic:Airport charge, terminal capacity, and suggested arrival time: Optimal decisions considering side business under different regulatory regimes
Speaker: Anming Zhang, Professor, Sauder School of Business, University of British Columbia
Host: LI Zhichun，Professor, Department of Management Science and Information Management, School of Management of HUST
Time and Date: 10:00-12:00, 4 Dec.2023
Location: SOM 121
Abstract: This study investigates the strategic decisions of airports regarding (aeronautical) charges, terminal capacity, and suggested arrival time to passengers under various regulatory regimes, taking non-aeronautical business (concession) into consideration. Our model incorporates a monopolistic airport, airlines with market power, and passengers, thereby providing a comprehensive understanding of the interactions among these stakeholders. By analyzing the impact of dwell time at retail zones and queuing time at check-in zones on concession revenue, the research offers novel insights into airport decision-making processes and their economic implications under different objectives and regulatory constraints. Our findings reveal that, when trip demand is elastic to airport charges and raises concession revenue, profit-maximizing airports opt to subsidize airfares so as to increase the demand and concession revenue, rather than charging for aeronautical services. We also demonstrate that airport decisions on terminal capacity are influenced by traffic volume and the trade-off between revenue gains from increased traffic and revenue losses due to reduced dwell time. Furthermore, a profit-maximizing airport would suggest an earlier arrival time before flight departures in order to increase the non-aeronautical revenue as compared to a welfare-maximizing airport. We also find that dual-till regulation leads to higher social welfare and lower airport charges than single-till regulation.
Speaker’s Profile: Anming Zhang is a Full Professor in Operations and Logistics and holds the Vancouver International Airport Authority Chair Professor in Air Transportation at Sauder School of Business, University of British Columbia (UBC). He served as the Head of the Operations and Logistics Division, Sauder School of Business (2003-2005), and as the Director of UBC’s Centre for Transport Studies (2003-2004). He is the President of the World Air Transport Research Society (ATRS) and was, in 2020, the President of Transportation and Public Utilities Group (TPUG) of the American Economic Association. Dr. Zhang has published widely in the areas of transportation, logistics, industrial organization, and the Chinese economy. He is the Associate Editor of Transportation Research Part A, and Co-Editor-in-Chief of Transport Economics and Management (TEAM).
