Airport use agreements and cost efficiency of U.S. airports

Fecri Karanki and Siew Hoon Lim

Transport Policy, 2021, vol. 114, issue C, 68-77

Abstract: In this study, we examined the impact of airport use agreements on the cost efficiency of large and medium U.S. hub airports in the years between 2009 and 2019 using a stochastic cost frontier model. We found that residual airports were less cost-efficient than compensatory and hybrid airports. The cost inefficiency in turn may translate into higher user fees for the signatory airlines. The result suggests that the residual rate-setting method may exert a moral hazard problem of airport management, because under such method, any cost deficit incurred by the airport will be covered by the signatory airlines, and this arrangement effectively shifts the risk of airport budget shortfall away from airport management.

Keywords: Airport use agreements; Stochastic frontier analysis; Cost efficiency (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.tranpol.2021.09.006

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