EconPapers    
Economics at your fingertips  
 

Airport Charges – Interactions between Airlines and Airports

Terje A. Mathisen, Finn Jørgensen, Pål A. Pedersen and Georgina Santos ()

A chapter in The Economics of Airport Operations, 2017, vol. 6, pp 213-234 from Emerald Publishing Ltd

Abstract: Abstract A substantial part of airports’ revenues relates to charges covering the costs of services supplied by the airport. Charges are imposed on carriers, which in turn pass them or a percentage of them, on to passengers. In the present chapter, special attention is given to regional airports characterized by low traffic volumes, enabling only one or a few carriers to serve each destination. A classic economic model is presented to analyze how the pass-on rate depends on supply and demand characteristics and market structure. Some illustrative examples assuming combinations of common specifications for market characteristics are also presented, showing pass-on rates ranging from 50% to more than 100%. Consequently, market structure and characteristics of carriers and passengers are decisive for how passengers experience changes in airport charges. The differences between the optimal charge from the perspectives of the airport and the welfare of society are specifically addressed. It is demonstrated that knowledge of the pass-on rate in the monopoly cases may be sufficient to infer how the mark-up will be affected by a change in marginal costs. Consequently, the understanding of the pass-on rate is relevant for airport owners and for decision-makers when considering the welfare of passengers and other politically stated goals.

Keywords: Airport charge; pass-on rate; carrier; passenger; regional airport; competition; airlines; L93; L12; D21 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/S2212-160920 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

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:eme:aiaezz:s2212-160920170000006009

Ordering information: This item can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldgr ... ies.htm?id=2212-1609

Access Statistics for this chapter

More chapters in Advances in Airline Economics from Emerald Publishing Ltd
Bibliographic data for series maintained by Charlotte Maiorana ().

 
Page updated 2022-01-08
Handle: RePEc:eme:aiaezz:s2212-160920170000006009