Congestion and subsequent delays have been prevalent in many U.S. airports in recent years. A common response to congestion, championed by many community leaders, is to expand capacity by constructing new runways and terminals. Airport expansions are costly, complex, and controversial. We begin by using basic economic theory to analyze congestion at those airports that are part of an air transportation system. Next, we describe how benefit-cost analysis is used to assess the desirability of airport expansions. Many of the key points are illustrated in the context of Lambert–St. Louis International Airport. We also examine two especially controversial aspects of expansions—the displacement of people and businesses and the effects of airport noise. Finally, we discuss congestion-based pricing of landing fees as an alternative to airport expansions.
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Article provided by Federal Reserve Bank of St. Louis in its journal Review.
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