Understanding Airport Leakage through Supply-and-Demand Interaction Models

• Author / Creator

  Fu, Qian

• Airport leakage is a phenomenon that occurs when air passengers choose to travel longer surface distances to take advantage of better air services at an airport further away (i.e., the substitute airport), instead of, as expected, using their local airport. The overall objective of this research is to investigate what factors affect airport leakage and how they affect airport leakage, in the context of models that consider the two-way interactions between air transportation demand and supply. More specifically, three categories of factors are investigated, including demographic, ground access, and air service factors. Two models have been explored in this regard. The first is a two-stage least squares model which is used to test the hypothesis that airport leakage occurs at 10 medium-size airports in the United States. It was found that the substitute airport, with lower airfare and higher enplanements, may attract passengers that would otherwise use their local, medium-size airport. In addition, passengers travelling in a group of three or more were shown to prefer their local airport even when the substitute airport provides lower airfare. It was also found that airports with higher traffic would attract more passengers. The second model explores the supply-demand equilibrium using a binary logit model to estimate the market shares of two competing (local and substitute) airports. A numerical analysis was performed to explore the sensitivity of equilibrium market share to coefficients, airfare, flight frequency and ground access distance. Results show that passengers will be attracted to the substitute airport to take advantage of lower airfare and higher flight frequency. If the substitute airport reduces its airfare, the airfare at the local airport will also be reduced. As a combination effect of the two airfares, the equilibrium market share changes. Furthermore, it was found that locations will have different market shares even if their ground access distances to the local airport are identical.

• Subjects / Keywords

  • Supply-demand Equilibrium
  • Supply-and-Demand
  • Airport Choice
  • Airport Competition
  • Airport Leakage

• Graduation date

  Spring 2015

• Type of Item

  Thesis

• Degree

  Master of Science

• DOI

  https://doi.org/10.7939/R3CR5NM53

• License

  This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.