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

  • Heike Link


    (German Institute for Economic Research, Berlin)

  • Wolfgang Götze


    (University of Applied Sciences, Stralsund)

  • Veli Himanen


    (Transplan Ltd., Helsinki)

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.

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Paper provided by Institute of Transport Economics, University of Muenster in its series Working Papers with number 11.

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Length: 25 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:mut:wpaper:11
Contact details of provider: Postal: Universitätsstr. 14-16, 48143 Münster
Phone: 02 51 / 83-2 29 10
Fax: 02 51 / 83-2 83 99
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  1. Small, Kenneth A & Winston, Clifford, 1988. "Optimal Highway Durability," American Economic Review, American Economic Association, vol. 78(3), pages 560-69, June.
  2. 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.
  3. 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 245-60, February.
  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. Johansson, Per & Nilsson, Jan-Eric, 2004. "An economic analysis of track maintenance costs," Transport Policy, Elsevier, vol. 11(3), pages 277-286, July.
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