Airport and airlines competition: Incentives for vertical collusion

This paper develops a model of airport and airline competition in a three-stage game. We analyse incentives for vertical collusion between one airport and one airline that compete with another airport and another airline, by means of static and dynamic games. We find that incentives for collusion exist when airports and airlines have different market sizes and, under certain conditions. also when secondary airports and low cost airlines compete with main airports and full service airlines. (C) 2009 Elsevier Ltd. All rights reserved.