تاثیر ورود حامل های کم هزینه بر مدل تقاضای Airport-pairs با استفاده از رویکرد تمرکز بازار   Entry effect of low-cost carriers on airport-pairs demand model using market concentration approach

1. Introduction Trends such as open sky policies, low-cost airline growth, and airport financial autonomy accelerate airport competition in the golden aviation circle of Northeast Asia. This has accomplished the goal of single day travel cycle from Taiwan to Shanghai in China, Tokyo in Japan, and Seoul in the Republic of Korea. There are two important airports located in North Taiwan; Taoyuan International Airport (TPE), a large-scale hub airport with frequent flights; and Songshan International Airport (TSA), a city airport with access advantage to CBD. Similarly, the dual-airport system also exists in three destination cities, Shanghai (PVG and SHA airports), Tokyo (NRT and HND airports), and Seoul (ICN and SEL airports). Accordingly, passengers have varied options of airport-pairs routes for each city-pair flight. For example, with city-pairs flight from Taipei to Shanghai, one can choose among three airport-pairs routes: TPE-PVG, TSA-SHA, and TSA-PVG. Multiple airport-pairs routes lead to individuals facing diverse alternatives in air travel and intense competition among airlines. There also exist codeshare (CS) flights among airlines. For example, considering the TPE-NRT route, there are CS flights operated by airlines of origin country (China Airlines, EVA Air, and TransAsia Airways), destination country (Japan Airlines and All Nippon Airways), third-party country (Cathay Pacific), and low cost carriers (Scoot and Vanilla Air). In terms of entry effect of low cost carriers (LCC), most findings in previous research reveal that the entry effect of a LCC decreases the airfares and leads to an increase in the passenger traffic. The most famous case is the Southwest airlines effect; Goolsbee and Syverson (2008) revealed that the incumbents cut fares signifi- cantly when threatened by Southwest’s entry. Fuellhart et al. (2013) indicated that the “Southwest effect” significantly explained the complexity of air-travel patterns within multiple-airport regions (MARs). Furthermore, the entry effect of LCC on airport competition and market structure has also been recognized by several studies (Fuellhart et al., 2013; Brueckner et al., 2014; Gillen and Hazledine, 2015). Murakami (2011) indicated that averagely, the type of airport, primary or secondary, does not affect the degree of airfare wars when LCCs enter market. Additional entries of LCCs do not affect the degree of airfare wars. Huma (2015) showed that the influence LCC used to exercise is diminishing in recent times. However, in terms of passenger traffic, entry has no direct effect, but indirectly through prices. In summary, most previous studieshave addressed the effect of entry on LCC through airfare and passenger traffic, however, very few studies focus on entry effect through the influence of market concentration. Not only can this viewpoint be used to investigate airlines competition, but also examine the change of market structure after new LCCs’ entries. From the description of current aviation market, we can know that there exist competition-cooperation relationships between various airports and airlines. A passenger demand model with precise forecast is important to know what influential factors affect passenger demand and to help operating carriers propose a more effective strategy. Therefore, this study used aggregate data, instead of individual-level survey, to investigate the causal relationship between the route-level passenger demand and influential factors, such as flight attributes, airlines types, LCC effect, market power, and holiday factor. This study has three objectives: 1. Constructing a passenger demand model for airport-pairs routes; 2. Identifying those important factors and their effects on passenger demand; and 3. Validating the proposed passenger model with calibrating and validating samples.