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An analysis of an airport–airline relationship under a risk sharing contract

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  • Hihara, Katsuya

Abstract

This paper analyzes a risk sharing incomplete contract under which an airline agrees to serve an airport in exchange for payment to/from the airport based on the difference between a realized and a target load factor. The key results are that we specified the relevant conditions on payments and utilities under which the incomplete contract can overcome the under-effort problem and achieve the efficient utility levels. These results are numerically illustrated by showing the impacts of the project prospect deterioration and the uncertainty increases on effort and utility levels.

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  • Hihara, Katsuya, 2012. "An analysis of an airport–airline relationship under a risk sharing contract," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(5), pages 978-992.
    • Handle: RePEc:eee:transe:v:48:y:2012:i:5:p:978-992
    DOI: 10.1016/j.tre.2012.03.002
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    References listed on IDEAS

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    Cited by:

    1. Minyoung Yea & Seokhyun Chung & Taesu Cheong & Daeki Kim, 2018. "The Sharing of Benefits from a Logistics Alliance Based on a Hub-Spoke Network: A Cooperative Game Theoretic Approach," Sustainability, MDPI, vol. 10(6), pages 1-16, June.
    2. Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2016. "Airport capacity choice under airport-airline vertical arrangements," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 298-309.
    3. Stephenson, Caitlin & Lohmann, Gui & Spasojevic, Bojana, 2018. "Stakeholder engagement in the development of international air services: A case study on Adelaide Airport," Journal of Air Transport Management, Elsevier, vol. 71(C), pages 45-54.
    4. Chen, Xin & Zhang, Zhen & Xuan, Chao & Qiu, Rui, 2024. "Evolutionary analysis of airline networks under different airport-provided subsidy regimes in the context of multiple airport systems," Journal of Air Transport Management, Elsevier, vol. 119(C).
    5. Karanki, Fecri & Bilotkach, Volodymyr, 2024. "The impact of Airport business practices and governance forms on excess capacity," Economics of Transportation, Elsevier, vol. 38(C).
    6. Karanki, Fecri & Lim, Siew Hoon, 2020. "The effects of use agreements on airport efficiency," Journal of Air Transport Management, Elsevier, vol. 84(C).
    7. Puls, René & Lentz, Cheryl, 2018. "Retail concessions at European airports: Commercial strategies to improve non-aeronautical revenue from leisure travelers," Journal of Air Transport Management, Elsevier, vol. 71(C), pages 243-249.
    8. Tuchen, Stefan & Arora, Mohit & Blessing, Lucienne, 2020. "Airport user experience unpacked: Conceptualizing its potential in the face of COVID-19," Journal of Air Transport Management, Elsevier, vol. 89(C).
    9. Kim, Amy M. & Ryerson, Megan S., 2018. "A long drive: Interregional airport passenger “leakage” in the U.S," Tourism Management, Elsevier, vol. 65(C), pages 237-244.
    10. Kidokoro, Yukihiro & Lin, Ming Hsin & Zhang, Anming, 2016. "A general-equilibrium analysis of airport pricing, capacity, and regulation," Journal of Urban Economics, Elsevier, vol. 96(C), pages 142-155.
    11. Saraswati, Batari & Hanaoka, Shinya, 2014. "Airport–airline cooperation under commercial revenue sharing agreements: A network approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 17-33.
    12. Allroggen, Florian & Malina, Robert & Lenz, Ann-Katrin, 2013. "Which factors impact on the presence of incentives for route and traffic development? Econometric evidence from European airports," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 49-61.
    13. Ryerson, Megan S. & Kim, Amy M., 2018. "A drive for better air service: How air service imbalances across neighboring regions integrate air and highway demands," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 237-255.
    14. Tsunoda, Yushi, 2023. "Airport concession revenue sharing and entry deterrence," Economics of Transportation, Elsevier, vol. 33(C).

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