City-Pairs vs. Airport Pairs

This paper provides a methodology for deciding which airports warrant grouping in multi-airport metropolitan areas. 16.12.2010 This paper provides a methodology for deciding which airport warrant grouping in multi-airport metropolitan areas. The methodology is based on comparability of incremental competition effects from nearby airports on average fares at a metropolitan area's primary airport. Results from a quarterly panel data set for the period 2003-2009 provide strong evidence that city-pairs, rather than airpot-pairs, are the appropriate market definition for analysis of passenger air transportationinvolving many (but not all) large metropolitan areas. Based on the proposed method, we offer a recommended list of airports that should be grouped when creating city-pairs for the analysis of competition in the U.S. domestic airline industry. Brueckner, J.K., Lee, D., Singer, E. (2010) City-Pairs vs. Airport Pairs: A Market Definition Methodology for the Airline Industry .