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Airport charges, economic growth, and cost recovery

Author

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  • Zhang, Anming
  • Zhang, Yimin

Abstract

This paper shows that "strict" financial break-even for airports may not be socially desirable. To maximize social welfare, airports should be allowed to take losses or make profits at different times while achieving break-even only in the long run. In particular, with economies growing over time, socially optimal pricing for a new airport can involve deficit in its early years and surplus in its later years. This result has practical policy implications for the newly-built or expanded airports especially in the Asia-Pacific region.

Suggested Citation

  • Zhang, Anming & Zhang, Yimin, 2001. "Airport charges, economic growth, and cost recovery," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(1), pages 25-33, March.
  • Handle: RePEc:eee:transe:v:37:y:2001:i:1:p:25-33
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    Citations

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    Cited by:

    1. Etienne Billette de Villemeur & Kevin Guittet, 2004. "Optimal structure of air transport services when environnemental costs are taken into account," Post-Print hal-01022242, HAL.
    2. Zhang, Anming & Zhang, Yimin, 2006. "Airport capacity and congestion when carriers have market power," Journal of Urban Economics, Elsevier, vol. 60(2), pages 229-247, September.
    3. Takebayashi, Mikio, 2018. "Managing airport charges under the multiple hub network with high speed rail: Considering capacity and gateway function," Transportation Research Part A: Policy and Practice, Elsevier, vol. 112(C), pages 108-123.
    4. Stela Todorova, 2018. "Air Transport and Economic Growth of the Regions: Cointegration and Analysis of Causation in Bulgaria," Regional Economy and Sustainable Development, Conference Proceedings 2017, Research Institute, University of Economics - Varna, issue 1, pages 215-224, March.
    5. Zhang, Anming & Zhang, Yimin, 2003. "Airport charges and capacity expansion: effects of concessions and privatization," Journal of Urban Economics, Elsevier, vol. 53(1), pages 54-75, January.
    6. Zheng, Shiyuan & Negenborn, Rudy R., 2014. "Centralization or decentralization: A comparative analysis of port regulation modes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 69(C), pages 21-40.
    7. Kidokoro, Yukihiro & Zhang, Anming, 2018. "Airport congestion pricing and cost recovery with side business," Transportation Research Part A: Policy and Practice, Elsevier, vol. 114(PA), pages 222-236.
    8. Balliauw, Matteo & Onghena, Evy, 2020. "Expanding airport capacity of cities under uncertainty: Strategies to mitigate congestion," Journal of Air Transport Management, Elsevier, vol. 84(C).
    9. Mantin, Benny, 2012. "Airport complementarity: Private vs. government ownership and welfare gravitation," Transportation Research Part B: Methodological, Elsevier, vol. 46(3), pages 381-388.
    10. Baker, Douglas & Merkert, Rico & Kamruzzaman, Md., 2015. "Regional aviation and economic growth: cointegration and causality analysis in Australia," Journal of Transport Geography, Elsevier, vol. 43(C), pages 140-150.

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