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Brazilian airport economics from a geographical perspective

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  • Fernandes, Elton
  • Pacheco, Ricardo Rodrigues
  • Braga, Márcia Estrada

Abstract

This paper discusses the revenue and expenditure functions of a sample of Brazil’s airports administered by Infraero, the Brazilian State enterprise responsible for administering the country’s major airports. It aims to identify what volume of movement at the airports associates with positive net earnings, i.e., the break-even point between revenue and expenditure, in view of aspects of airport movement and geographical factors. It examines airports serving regular airlines and with movement of up to 8 million passengers in 2010. Revenues and expenditures are explained by total passengers embarked and disembarked at each airport and by the potential of the airport’s ‘anchor city’. Multiple regression analysis achieved a high level of explanation for the dependent variables studied, i.e., revenues and expenditures. The model explains 81% and 91% of the variations in revenues and expenditures, respectively. The analysis shows that, considering the ranking of cities, Brazilian airports with less than 2 million passengers tend to operate at a financial loss, those with between 2 and 3 million passengers are at the transition stage between positive and negative earnings, while airports with more than 3 million passengers tend to make gains. However, the simulation modelling shows that the break-even point between expenditure and revenue functions can vary considerably when different ‘city potentials’ are considered. In this respect, the modelling offers investors a tool for analyzing passenger demand risk in the light of expectations for Brazilian cities’ potential.

Suggested Citation

  • Fernandes, Elton & Pacheco, Ricardo Rodrigues & Braga, Márcia Estrada, 2014. "Brazilian airport economics from a geographical perspective," Journal of Transport Geography, Elsevier, vol. 34(C), pages 71-77.
    • Handle: RePEc:eee:jotrge:v:34:y:2014:i:c:p:71-77
    DOI: 10.1016/j.jtrangeo.2013.11.003
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    References listed on IDEAS

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    1. Wanke, Peter F., 2012. "Efficiency of Brazil's airports: Evidences from bootstrapped DEA and FDH estimates," Journal of Air Transport Management, Elsevier, vol. 23(C), pages 47-53.
    2. Pacheco, Ricardo Rodrigues & Fernandes, Elton & de Sequeira Santos, Marcio Peixoto, 2006. "Management style and airport performance in Brazil," Journal of Air Transport Management, Elsevier, vol. 12(6), pages 324-330.
    3. Kato, Kazusei & Uemura, Toshiyuki & Indo, Yuichi & Okada, Akira & Tanabe, Katsumi & Saito, Shinichi & Oguma, Hitoshi & Yamauchi, Hirotaka & Shiomi, Eiji & Saegusa, Madoka & Migita, Kazuyoshi, 2011. "Current accounts of Japanese airports," Journal of Air Transport Management, Elsevier, vol. 17(2), pages 88-93.
    4. Elton Fernandes & Ricardo Rodrigues Pacheco, 2010. "The causal relationship between GDP and domestic air passenger traffic in Brazil," Transportation Planning and Technology, Taylor & Francis Journals, vol. 33(7), pages 569-581, July.
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    7. Marazzo, Marcial & Scherre, Rafael & Fernandes, Elton, 2010. "Air transport demand and economic growth in Brazil: A time series analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(2), pages 261-269, March.
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    Cited by:

    1. de Paula, R.O. & Silva, L.R. & Vilela, M.L. & Cruz, R.O.M., 2019. "Forecasting passenger movement for Brazilian airports network based on the segregation of primary and secondary demand applied to Brazilian civil aviation policies planning," Transport Policy, Elsevier, vol. 77(C), pages 23-29.
    2. Zuidberg, Joost, 2017. "Exploring the determinants for airport profitability: Traffic characteristics, low-cost carriers, seasonality and cost efficiency," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 61-72.

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