Is Mixing Airport Charges Collusive?

35 Pages Posted: 29 Sep 2016

See all articles by Achim Czerny

Achim Czerny

Hong Kong Polytechnic University - Faculty of Business

Simon Cowan

University of Oxford - Department of Economics

Anming Zhang

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

Date Written: September 9, 2016

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 can implement collusive fares and reduce welfare at slot-constrained airports. But, an increase in the per-passenger based charges can mitigate strategic frequency choices at uncongested airports leading to an increase in both carrier profit and welfare.

Keywords: Airports, airlines, collusion, schedule delays, slots

JEL Classification: D40, H20, H40, L93, R48

Suggested Citation

Czerny, Achim and Cowan, Simon G.B. and Zhang, Anming, Is Mixing Airport Charges Collusive? (September 9, 2016). Available at SSRN: https://ssrn.com/abstract=2845204 or http://dx.doi.org/10.2139/ssrn.2845204

Achim Czerny (Contact Author)

Hong Kong Polytechnic University - Faculty of Business ( email )

9/F, Li Ka Shing Tower
The Hong Kong Polytechnic University
Hong Kong, Hung Hom, Kowloon M923
China

Simon G.B. Cowan

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Anming Zhang

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

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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