Airport congestion pricing and capacity: Cost recovery with per-flight or per-passenger charges

Ming Hsin Lin

Economics of Transportation, 2025, vol. 42, issue C

Abstract: This study investigates congestion pricing and capacity investment for internationally interlinked airports considering cost recovery. Our global welfare maximization shows that “single pricing per-flight” or “single pricing per-passenger” could be sufficiently cost-recovering alternatives when first-best per-passenger subsidies are not feasible under “mix pricing (choosing per-flight and per-passenger charges).” However, each cost-recovering single-pricing method causes distortions, and single pricing per-flight is the smaller distortive. Our local welfare maximization shows similar results when per-passenger subsidies under mix pricing for each country are not feasible. Surprisingly, when each country's mix pricing does not require per-passenger subsidies, the distortions under cost-recovering single pricing per-flight may be smaller than those under cost-recovering mix pricing. However, each airport's capacity investment can be socially efficient only when single pricing per-passenger is adopted.

Keywords: Internationally interlinked airport; per-flight charge; per-passenger charge; Cost recovery; Local welfare maximization (search for similar items in EconPapers)
JEL-codes: H2 L5 L9 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:42:y:2025:i:c:s2212012225000188

DOI: 10.1016/j.ecotra.2025.100410

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