Estimating the marginal costs of airport operation by using multivariate time series model with correlated error terms

The research presented in this paper was motivated by the central role of infrastructure charing in European transport policy. It is dedicated to the question whether and to what extent marginal infrastructure costs of airports, e.g. the marginal costs of maintaining, renewing and operating airport infrastructure, play a significant role for charging. The analysis presented in this paper is based on hourly cost and traffic data for the airport of Helsinki. In contrast to the standard formulation of cost function analysis our research focuses on one factor input only, the labour cost which ist the dominant cost component for the case study airport. This factor input can safely assumed to be the most relevant category for analysing cost variability and deriving marginal costs. The analysis makes use of a multivariate time series approach with specific models for correlated error terms to account for random shocks such as delays. The major result ist for almost all airport service areas a linear relationship betwenn labour cost and aircraft movements with an average marginal cost of € 22.60. An exception is the relationship between the staff costs for passenger services and international departing flights where a cubic cost relationship was estimated. Our quantitative findings are comparable with earlier findings for U.S. airports.