Highlights We analyze per-flight and per-passenger based charges from the carriers and the social viewpoints. We capture the notion of airport cost recovery and concentrate on oligopolistic airline markets. We find that per-passenger based airport charges can, under certain conditions, be used to implement monopoly ticket prices at slot-constrained airports. We further find that if carriers articulate a strong preference for per-passenger based charges, such charges can also be optimal from the social viewpoint at uncongested airports.

    Abstract While airport aeronautical charges are traditionally aircraft-weight related, currently an increasing share of aeronautical airport revenues is derived from passenger related charges. This paper compares the optimal mix of per-passenger and per-flight based (cost recovering) airport charges from the carriers’ and the social viewpoints when carrier markets are oligopolistic. We show that positive per-passenger charges might be able to support the implementation of monopoly fares at slot-constrained airports. They can also mitigate strategic frequency reductions at uncongested airports, leading to an increase in both carrier profit and welfare relative to a charging scheme that fully relies on per-flight charges.


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    Title :

    How to mix per-flight and per-passenger based airport charges: The oligopoly case


    Contributors:


    Publication date :

    2017-04-12


    Size :

    18 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English




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