Sequential Peak-Load Pricing: The Case of Airports and Airlines

33 Pages Posted: 14 Jul 2008

See all articles by Leonardo J. Basso

Leonardo J. Basso

Universidad de Chile - Civil Engineering Department

Anming Zhang

University of British Columbia (UBC) - Sauder School of Business

Abstract

We investigate airport peak-load pricing using a vertical structure of airport and airlines. We find that a profit-maximizing airport would charge higher peak and off-peak runway prices and a higher peak/off-peak price differential than a public airport. Consequently, airport privatization would lead to both fewer total passengers and fewer passengers in the peak period. Although peak-travelling passengers benefit from fewer delays, this low level of peak congestion is not efficient, suggesting that airport privatization cannot be judged based on its effect on congestion alone. We also examine pricing behaviour of a public airport constrained to charge a time independent price.

Suggested Citation

Basso, Leonardo J. and Zhang, Anming, Sequential Peak-Load Pricing: The Case of Airports and Airlines. Canadian Journal of Economics/Revue canadienne d'économique, Vol. 41, Issue 3, pp. 1087-1119, August/août 2008, Available at SSRN: https://ssrn.com/abstract=1158678 or http://dx.doi.org/10.1111/j.1540-5982.2008.00497.x

Leonardo J. Basso (Contact Author)

Universidad de Chile - Civil Engineering Department ( email )

Casilla 228-3
Santiago
Chile
56 2 978 4380 (Phone)
56 2 689 4206 (Fax)

HOME PAGE: http://tamarugo.cec.uchile.cl/~dicidet/leo.html

Anming Zhang

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
760
PlumX Metrics