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Single Till or Dual Till at Airports: a Two-Sided Market

Author

Listed:
  • Estelle Malavolti

    (Ecole Nationale de l'Aviation Civile (ENAC))

Abstract

Big airports profits are more and more often coming from commercial activities such as retailing. However, commercial services are relatively far from the original mission of the airport: providing airlines with aviation services such as ground handling, terminal management or airside operations, and being regulated for that because of an obvious dominant position with respect to airlines. For this reason, one can advocate for the separation of the two activities, i.e. for a dual till approach, in which only the aeronautical activity is regulated. We, instead, suggest that a single till regulation, in which the total profit of the airport is examined, is relevant because it allows to take into account the externalities existing between retailing and aeronautical services. Using a two-sided market approach (Armstrong 2006, Rochet-Tirole 2003, 2006), we show that the airport is a platform which makes the shops and the passengers meet. The retailing activity depends on how many passengers are circulating and connecting at the airport, as well as the time they spent in the airport, while passengers value the least connecting time as possible. We show that the aeronautical tax can be either higher or lower under single till depending on whether the impact of the passengers demand or of the waiting time is the more important for the shops.

Suggested Citation

  • Estelle Malavolti, 2014. "Single Till or Dual Till at Airports: a Two-Sided Market," GREDEG Working Papers 2014-46, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  • Handle: RePEc:gre:wpaper:2014-46
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    File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2014-46.pdf
    File Function: Revised version, 2014
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    References listed on IDEAS

    as
    1. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2005. "Advertising, Competition and Entry in Media Industries," CESifo Working Paper Series 1591, CESifo Group Munich.
    2. Peitz, Martin & Valletti, Tommaso M., 2008. "Content and advertising in the media: Pay-tv versus free-to-air," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 949-965, July.
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    Cited by:

    1. Bettini, Humberto F.A.J. & Oliveira, Alessandro V.M., 2016. "Two-sided platforms in airport privatization," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 262-278.

    More about this item

    Keywords

    two-sided market; network externalities; air transport economics;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other

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