Hub-airport congestion pricing and capacity investment

Ming Hsin Lin and Yimin Zhang

Transportation Research Part B: Methodological, 2017, vol. 101, issue C, 89-106

Abstract: This study examines hub-airport congestion pricing and capacity investment using a simple hub-spoke network model, in which hub-carrier scheduling causes both schedule delays and congestion delays. The “fixed-proportion assumption” is removed. We find the following. (i) A public hub airport requires both per-flight charges, which must be movement-related but cannot be weight-related, and discriminatory per-local and per-connecting passenger charges to reach the first-best outcome. (ii) Either weight-related per-flight charges or the marginal-operating-cost (MOC) pricing on local and/or connecting passengers cannot reach the first-best. (iii) First-best charges can lead capacity investment to be socially efficient. However, weight-related per-flights charges result in under-investment, whereas the MOC pricing results in over-investment in runway capacity. (iv) Private hubs that charge positive movement-related per-flight charges subsidize passengers through per-passenger charges. Finally, (v) movement-related per-flight charges lead private hubs to overinvest, whereas weight-related per-flight charges lead to either over- or under-investment.

Keywords: Hub-carrier scheduling; Schedule and congestion delay; Hub-airport congestion pricing; Movement-/weight-related charge; Capacity investment; Profit-maximizing hub airport (search for similar items in EconPapers)
JEL-codes: L5 L9 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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DOI: 10.1016/j.trb.2017.03.009

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