Airport charge, terminal capacity, and suggested airport arrival time: Considering non-aeronautical business

Yue Huai, Enoch Lee, Hong K. Lo and Anming Zhang

Transportation Research Part B: Methodological, 2025, vol. 196, issue C

Abstract: This study investigates the optimal decisions of airports regarding charges, capacity, and passengers’ suggested arrival time at the airport (before flight departures) under different objectives (maximizing airport profit or social welfare). Our model incorporates an airport, airlines with market power, and passengers, and examines the impact on concession revenue of dwell time in (terminal) retail zones and queuing time in check-in zones. We find that whether a profit-maximizing airport charges or subsidizes airlines for using its aeronautical service depends critically on whether the trip demand is elastic with respect to airport charge and whether trip demand increases the concession surplus. In particular, when this is elastic and the trip demand also raises concession revenue, the airport will subsidize airlines. For welfare-maximizing airports, when trip demand decreases the concession surplus (due to shopping time shrinkage), airports would set the charge that the ticket price paid by passengers is higher than the social marginal cost incurred. Further, the airport’s decisions regarding terminal capacity are influenced by the trade-off between the revenue gained from increased traffic and the revenue lost from the reduced dwell time. By comparison with a welfare-maximizing airport, a profit-maximizing airport tends to invest more in terminal capacity under lower traffic, but less under higher traffic: basically, the effect of expanding terminal capacity on increasing shopping time (dwell time in the retail zone) is more pronounced for lower traffic, and the effect diminishes for higher traffic. The study also shows that a profit-maximizing airport would suggest travelers arrive at the airport earlier than a welfare-maximizing airport, so as to increase the non-aeronautical revenue.

Keywords: Airport charge; Terminal capacity investment; Suggested arrival time; Non-aeronautical business (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0191261525000712
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transb:v:196:y:2025:i:c:s0191261525000712

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.trb.2025.103222

Access Statistics for this article

Transportation Research Part B: Methodological is currently edited by Fred Mannering

More articles in Transportation Research Part B: Methodological from Elsevier
Bibliographic data for series maintained by Catherine Liu ().