The Cost Structure of the UK Airport Industry
In this paper we analyse the cost structure of the UK airport industry by estimating a variable cost function for the period 1994-2005. Overall results suggest that average costs decrease until passenger traffic reaches 5 million, remain constant over the range between 5 million and 14 million passengers, and afterwards start to increase. Moreover, we find evidence consistent with the existence of overcapitalisation for the largest regulated airports. Finally, private airports seem to be characterised by lower costs, although cost differentials associated with ownership status shrank over time. The main results are robust to unobserved heterogeneity and to endogeneity biases. © 2012 LSE and the University of Bath
Volume (Year): 46 (2012)
Issue (Month): 3 (September)
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