Managing the multiple airport system by coordinating short/long-haul flights

This paper considers the effectiveness of the perimeter rule for managing a multiple airport system by focusing on airline’s network design behavior as well as air passenger’s route choice behavior. We apply a bi-level air transport market model that deals with behavior of two participants: airlines as leaders and passengers as followers. The results of numerical computations suggest that the equilibrium solution under the perimeter rule is the best for both airlines and air passengers; essentially airlines face a prisoner’s dilemma without the perimeter rule.

► The effectiveness of perimeter rule for the multiple airport system is examined. ► The bi-level model dealing with airlines and passengers simultaneously is applied. ► The solution under perimeter rule is the best for both airlines and air passengers. ► Airlines face the prisoner’s dilemma without the perimeter rule.