Airport Congestion in EU: More Investment or Better Pricing?

20 Pages Posted: 7 Feb 2005

See all articles by Ofelia Betancor

Ofelia Betancor

University of Las Palmas de Gran Canaria - Analisis Economico Aplicado

Gustavo Nombela

University of Las Palmas (Spain)

Gines de Rus

University of Las Palmas de Gran Canaria; University of Las Palmas de Gran Canaria

Date Written: September 2003

Abstract

Airport congestion has been generally dealt in the literature in a similar fashion as road congestion. However, the phenomenon is quite different, because entry at airports is not random. Flight delays are a consequence of system overload, which is linked to profit maximization decisions of airports and airlines. Moreover, airport congestion exhibits a cascade-type of effect not present in roads: one single delay may generate congestion accumulating over the next hours. Therefore, congestion costs depend on the time of the day which is studied. This paper analyzes airport congestion from this perspective, arguing that a combination of peak-load pricing and investments in new capacity is probably not the best solution to airport congestion. A theoretical model shows that a pricing system based on congestion fees both for airlines and airports could do a better job to mitigate EU congestion costs. Data from flight delays at Madrid airport are used to illustrate our results.

Keywords: airport congestion, infrastructure, pricing

JEL Classification: R41, L93

Suggested Citation

Betancor, Ofelia and Nombela, Gustavo and de Rus, Gines and de Rus, Gines, Airport Congestion in EU: More Investment or Better Pricing? (September 2003). Available at SSRN: https://ssrn.com/abstract=663668 or http://dx.doi.org/10.2139/ssrn.663668

Ofelia Betancor

University of Las Palmas de Gran Canaria - Analisis Economico Aplicado

Dep. de Analisis Economico Aplicado
Las Palmas de Gran Canaria, Las Palmas 35017
Spain

Gustavo Nombela (Contact Author)

University of Las Palmas (Spain) ( email )

Campus de Tafira
35017 Las Palmas, Las Palmas 35017
Spain

Gines De Rus

University of Las Palmas de Gran Canaria ( email )

Campus de Tafira
35017 Las Palmas, Las Palmas 35017
Spain

University of Las Palmas de Gran Canaria ( email )

Campus de Tafira
35017 Las Palmas, Las Palmas 35017
Spain

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