Entry Airport Selection: Slot Limited Congestion Airport or Secondary Airport

This paper investigates whether the new carrier enters the slot limited congestion airport or the secondary airport which is located far from the central city, by using very simple model. In addition, this paper analyzes the slot allocation to maximize the social welfare. Then, under the slot allocation maximizing social welfare, we analyze whether the new carrier enters the congested airport or not. This paper demonstrates following conclusions. When the distance between the secondary airport and the central city is large (small), the new carrier enters the congestion airport (secondary airport). Next, the carrier’s cost difference between entering the congested airport and entering the secondary airport is small (large), new carrier has an excessive incentive to enter the secondary (congested) airport. Finally, given that an authority distributes slots to maximize the social welfare, if the marginal cost for slot allocation is large, new carrier may choose to enter the secondary airport which is not socially preferable