A Dynamically Inter-dependent Business Model for Airline and Airport Coexistence

The authors discuss a dynamically inter-dependent business model between an airline and an airport for coexistence. Governments provide various financial supports for sustaining unprofitable regional airways when such airways are essential to local life and the economy. However, providing inefficient subsidies are often criticised worldwide. The present paper examines a business model called load factor guarantee (LFG) in which an airline and an airport agree on the load factor of a flight and the either party compensates for any discrepancy between the actual and agreed upon load factor. System Dynamics is introduced to model the dynamic interactions of the two parties. The authors calibrated the model using data from Noto Airport and All Nippon Airways (ANA) from 2003to 2014. The key to the success of the coexistence between an airline and an airport is an integral management of annual negotiation of a target load factor and monthly demand adjustment with subsidies. Although a subsidy means a temporary financial loss for an airport, it is an effective way of maintaining the long-term airline and airport coexistence. The model is applicable to unprofitable airways worldwide and contributes to their sustainable management.

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: Appendices; Figures; References; Tables;
  • Pagination: pp 65-78
  • Monograph Title: Proceedings of the International Forum on Shipping, Ports and Airports (IFSPA) 2015: Empowering Excellence in Maritime and Air Logistics: Innovation Management and Technology

Subject/Index Terms

Filing Info

  • Accession Number: 01609507
  • Record Type: Publication
  • ISBN: 9789623677967
  • Files: TRIS
  • Created Date: Aug 5 2016 6:03PM