Why airports can face price-elastic demands: margins, lumpiness and leveraged passenger losses

David Starkie and George Yarrow
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David Starkie: Case Associated
George Yarrow: Case Associated

No 2013/23, International Transport Forum Discussion Papers from OECD Publishing

Abstract: The extent to which firms face price-elastic demands for their products is important in the application of competition law and in judgments made as to whether they have significant market power. In the context of the airport industry, assessing price-elasticities is complicated by the fact that one major type of consumer of airport services, the air passenger, is not charged directly for use of terminals and airside infrastructure. Instead, the airport derives its revenues from charges to airlines and from the supply of non-aeronautical services. The charges to airlines then become one of many input costs that the airlines recoup from passenger fares, and this intermediation has significant implications for the demand analysis.

Date: 2013-12-05
New Economics Papers: this item is included in nep-com, nep-mkt and nep-tre
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