Airport consolidation and the provision of air services

- Should a city be served by multiple airports or by a single, consolidated airport?
- Provision of air services depends on costs of operating and accessing the airport(s).
- This paper estimates the effect of the number of airports on the air services that are provided.
- Local air traffic is shown to be increasing in the number of airports, implying lower perflight costs.
- Cities with multiple airports are more likely to be chosen as hubs.

Airport policy involves decisions about not only the sizes of airports but how many airports should serve a given area. I test the arguments for airport consolidation by estimating the effect of the number of airports on total local traffic using US data and a historical instrument for the number of airports. Cities that are randomly allocated a larger number of airports are found to host more air traffic and flights to more destinations. Furthermore, the effect is largely due to a greater number of transit passengers, so cities with multiple airports are more likely to be chosen as airline hubs.