Airport choice and airline choice in the market for air travel between the San Francisco Bay area and greater Los Angeles in 1995

This paper empirically investigates the impact of airport and airline supply characteristics on the air travel choices of passengers departing from one of three San Francisco Bay area airports and arriving at one of four airports in greater Los Angeles. It does so by estimating a conditional logit model for the market of air travel between both metropolitan areas in 1995, and using the estimated model to simulate three counterfactual scenarios. First, reducing access times to San Francisco International airport by 10% for all travelers increases the market share of that airport by 4.5%-point. United Airlines benefits from the reduced access times, as its market share increases by 2.9%-point. Second, reducing average delays at San Francisco International airport by 10% has similar aggregate effects to the first scenario, but indicates that leisure travelers value access time reductions more than reduced delays. Third, entry of Southwest airlines in San Francisco International airport increases the market share of Southwest airlines by 5%-point to 15-%point, depending on assumptions concerning its continuation of services at Oakland International Airport, and assuming that rival carriers do not respond in terms of prices or service levels