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Non-aviation revenues and their implications for airport regulation

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  • Kratzsch, Uwe
  • Sieg, Gernot

Abstract

This paper analyzes a non-congested private airport that possesses market power in providing aeronautical services. We find that the profit-maximizing landing fee decreases in the degree of complementarity of aviation and non-aviation. Furthermore, our model implies that airports will not take advantage of their market power if non-aviation revenues, or the degree of complementarity of aviation and non-aviation, exceed a critical threshold. In this case, a dual-till regulation will be unnecessary. A single-till regulation, on the other hand, will always result in lower landing fees than laissez-faire.

Suggested Citation

  • Kratzsch, Uwe & Sieg, Gernot, 2011. "Non-aviation revenues and their implications for airport regulation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(5), pages 755-763, September.
    • Handle: RePEc:eee:transe:v:47:y:2011:i:5:p:755-763
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    Citations

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    Cited by:

    1. Ricardo Flores‐Fillol & Alberto Iozzi & Tommaso Valletti, 2018. "Platform pricing and consumer foresight: The case of airports," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 705-725, October.
    2. Czerny, Achim I. & Zhang, Hanxiang, 2020. "Rivalry between airport ancillary and city-center supplies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    3. Kidokoro, Yukihiro & Zhang, Anming, 2022. "Airport cities and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 158(C), pages 187-209.
    4. Engel, Eduardo & Fischer, Ronald & Galetovic, Alexander, 2018. "The joy of flying: Efficient airport PPP contracts," Transportation Research Part B: Methodological, Elsevier, vol. 114(C), pages 131-146.
    5. Tiziana D'Alfonso & Valentina Bracaglia & Yulai Wan, 2015. "Airport cities and multiproduct pricing," DIAG Technical Reports 2015-14, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    6. Fuerst, Franz & Gross, Sven, 2018. "The commercial performance of global airports," Transport Policy, Elsevier, vol. 61(C), pages 123-131.
    7. Tomová, Anna, 2016. "Are commercial revenues important to today's European air navigation service providers?," Journal of Air Transport Management, Elsevier, vol. 54(C), pages 80-87.
    8. Ronald Fischer & Diego Huerta, 2018. "Wealth Inequality and The Political Economy of Financial and Labour Institutions," Documentos de Trabajo 341, Centro de Economía Aplicada, Universidad de Chile.
    9. Bezerra, George C.L. & Gomes, Carlos F., 2018. "Performance measurement practices in airports: Multidimensionality and utilization patterns," Journal of Air Transport Management, Elsevier, vol. 70(C), pages 113-125.
    10. Valentina Bracaglia & Tiziana D'Alfonso & Alberto Nastasi, 2014. "Multiproduct airport competition and e-commerce strategies," DIAG Technical Reports 2014-04, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    11. 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.
    12. Kratzsch, Uwe & Sieg, Gernot, 2012. "No need to regulate airports with predominantly non-aeronautical revenues," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 52, pages 1-7.
    13. Barbot, Cristina & D'Alfonso, Tiziana, 2014. "Why do contracts between airlines and airports fail?," Research in Transportation Economics, Elsevier, vol. 45(C), pages 34-41.
    14. Yeo, Gi-Tae & Wang, Ying & Chou, Chien-Chang, 2013. "Evaluating the competitiveness of the aerotropolises in East Asia," Journal of Air Transport Management, Elsevier, vol. 32(C), pages 24-31.
    15. repec:aeg:report:2014-4 is not listed on IDEAS

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