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How to mix per-flight and per-passenger based airport charges

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  • Czerny, Achim I.
  • Zhang, Anming

Abstract

This paper investigates the questions of why carriers advocate for higher per-passenger airport charges and lower per-flight charges, and whether and when this proposal is welfare-enhancing. Specifically, the paper compares the optimal mix of per-flight and per-passenger based airport charges from both a monopoly carriers’ and the social viewpoints conditional on airport cost recovery. It focuses on the trade-off between price and frequency (i.e., schedule delays) when time valuations are uniform, or differ, between business and leisure passengers. We identify an easy test for the evaluation of the mix of per-passenger and per-flight based airport charges by policy makers, which is simply to check whether the carrier’s preferred per-flight charge is zero. Our analysis suggests that there is no need for immediate regulatory corrections of the current trend towards the strong use of per-passenger based airport charges.

Suggested Citation

  • Czerny, Achim I. & Zhang, Anming, 2015. "How to mix per-flight and per-passenger based airport charges," Transportation Research Part A: Policy and Practice, Elsevier, vol. 71(C), pages 77-95.
    • Handle: RePEc:eee:transa:v:71:y:2015:i:c:p:77-95
    DOI: 10.1016/j.tra.2014.10.014
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    Cited by:

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    5. Núñez-Sánchez, Ramón & Hidalgo-Gallego, Soraya & Martínez-San Román, Valeriano, 2020. "Airport charges and marginal costs for Spanish airports before the process of partial privatization," Transport Policy, Elsevier, vol. 99(C), pages 240-250.
    6. Lin, Ming Hsin, 2021. "Airport pricing and capacity: Schedule versus congestion delays," Research in Transportation Economics, Elsevier, vol. 90(C).
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    10. Czerny, Achim I. & Cowan, Simon & Zhang, Anming, 2017. "How to mix per-flight and per-passenger based airport charges: The oligopoly case," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 483-500.
    11. Doi, Naoshi & Kono, Tatsuhito & Suzaki, Izumo, 2023. "Optimizing Multiple Airport Charges with Endogenous Airline Quality Considering the Marginal Cost of Public Funds," MPRA Paper 116176, University Library of Munich, Germany.
    12. Lin, Ming Hsin, 2022. "Pricing regime choices for international airports: A rationale for the non-discrimination principle," Economics of Transportation, Elsevier, vol. 31(C).
    13. Aasheesh Dixit & Patanjal Kumar & Suresh Jakhar, 2021. "Airport-Airline Coordination with Economic, Environmental and Social Considerations," Papers 2110.11694, arXiv.org.
    14. Achim I. Czerny & Vincent A.C. van den Berg & Erik T. Verhoef, 2015. "Complementary Alliances with Endogenous Fleets and Load Factors," Tinbergen Institute Discussion Papers 15-134/VIII, Tinbergen Institute.
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