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Estimating the marginal costs of airport operation by using multivariate time series model with correlated error terms

Author

Listed:
  • Heike Link

    () (German Institute for Economic Research, Berlin)

  • Wolfgang Götze

    () (University of Applied Sciences, Stralsund)

  • Veli Himanen

    () (Transplan Ltd., Helsinki)

Abstract

The research presented in this paper was motivated by the central role of infrastructure charing in European transport policy. It is dedicated to the question whether and to what extent marginal infrastructure costs of airports, e.g. the marginal costs of maintaining, renewing and operating airport infrastructure, play a significant role for charging. The analysis presented in this paper is based on hourly cost and traffic data for the airport of Helsinki. In contrast to the standard formulation of cost function analysis our research focuses on one factor input only, the labour cost which ist the dominant cost component for the case study airport. This factor input can safely assumed to be the most relevant category for analysing cost variability and deriving marginal costs. The analysis makes use of a multivariate time series approach with specific models for correlated error terms to account for random shocks such as delays. The major result ist for almost all airport service areas a linear relationship betwenn labour cost and aircraft movements with an average marginal cost of € 22.60. An exception is the relationship between the staff costs for passenger services and international departing flights where a cubic cost relationship was estimated. Our quantitative findings are comparable with earlier findings for U.S. airports.

Suggested Citation

  • Heike Link & Wolfgang Götze & Veli Himanen, 2006. "Estimating the marginal costs of airport operation by using multivariate time series model with correlated error terms," Working Papers 11, Institute of Transport Economics, University of Muenster.
  • Handle: RePEc:mut:wpaper:11
    as

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    File URL: https://www.wiwi.uni-muenster.de/ivm/sites/ivm/files/documents/forschung/diskussionspapiere/diskussionspapier11.pdf
    File Function: First version, 2006
    Download Restriction: no

    References listed on IDEAS

    as
    1. Link, Heike, 2006. "An econometric analysis of motorway renewal costs in Germany," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 19-34, January.
    2. Small, Kenneth A & Winston, Clifford, 1988. "Optimal Highway Durability," American Economic Review, American Economic Association, vol. 78(3), pages 560-569, June.
    3. Johansson, Per & Nilsson, Jan-Eric, 2004. "An economic analysis of track maintenance costs," Transport Policy, Elsevier, vol. 11(3), pages 277-286, July.
    4. Link, Heike & Nilsson, Jan-Eric, 2005. "Infrastructure," Research in Transportation Economics, Elsevier, vol. 14(1), pages 49-83, January.
    5. Encaoua, David, 1991. "Liberalizing European airlines : Cost and factor productivity evidence," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 109-124, March.
    6. Baltagi, Badi H & Griffin, James M & Rich, Daniel P, 1995. "Airline Deregulation: The Cost Pieces of the Puzzle," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 245-260, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Voltes-Dorta, Augusto & Lei, Zheng, 2013. "The impact of airline differentiation on marginal cost pricing at UK airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 55(C), pages 72-88.
    2. Juan Martín & Concepción Román & Augusto Voltes-Dorta, 2009. "A stochastic frontier analysis to estimate the relative efficiency of Spanish airports," Journal of Productivity Analysis, Springer, vol. 31(3), pages 163-176, June.
    3. Link, Heike & Götze, Wolfgang & Himanen, Veli, 2009. "Estimating the marginal costs of airport operation using multivariate time series models with correlated error terms," Journal of Air Transport Management, Elsevier, vol. 15(1), pages 41-46.
    4. Martin, Juan Carlos & Voltes-Dorta, Augusto, 2007. "Marginal Cost Estimations In Airports. Multiproductive Cost Functions And Stochastic Frontiers: An International Airports Case Study," 48th Annual Transportation Research Forum, Boston, Massachusetts, March 15-17, 2007 207931, Transportation Research Forum.

    More about this item

    Keywords

    Cost functions; time series analysis; airports; marginal costs; infrastructure charging;

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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