The economics of airports’ pricing

Abstract

This chapter reviews the airport pricing literature of the last 10-15 years. We begin by providing an overview of congestion pricing, understood as the welfare-maximizing pricing of the negative externality between flights. We then consider the second-best pricing problems, including the self-financing airport pricing and the existence of limitations on pricing instruments and differentiating tolls over firms. We also look at pricing by private airports, airport competition and capacity investments, regulation, and the role of non-aeronautical revenues. We continue by discussing the potential equivalence of congestion pricing and slot management at congested airports. Finally, we examine how externalities other than congestion, such as environmental externalities (noise, emissions), could be incorporated into airports’ pricing schemes. We conclude by providing what we think future research lines should be for the airport pricing and regulation literature.