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Inverting the regulatory rules? Optimizing airport regulation to account for commercial revenues

Author

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  • Evangelinos, Christos
  • Püschel, Ronny
  • Goldhahn, Susan

Abstract

This paper analyzes the role of commercial revenues in today's airport regulatory system. We find that the current regulatory regime only partially achieves core aims such as welfare maximization. After highlighting instances in which airport price regulation is not economically justified, we explore the potential for airports to exercise market power in the commercial sector. In certain circumstances, we advocate the introduction of an 'inverted' dual till system under which commercial as opposed to aviation revenues are the focus of price regulation. The suitability of such a system varies from airport to airport, however, depending on various factors, such as the airport's competitive environment and the presence of capacity constraints.

Suggested Citation

  • Evangelinos, Christos & Püschel, Ronny & Goldhahn, Susan, 2011. "Inverting the regulatory rules? Optimizing airport regulation to account for commercial revenues," Discussion Papers 1/2011, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.
    • Handle: RePEc:zbw:tudiwv:12011
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    References listed on IDEAS

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    Cited by:

    1. Fuerst, Franz & Gross, Sven, 2018. "The commercial performance of global airports," Transport Policy, Elsevier, vol. 61(C), pages 123-131.

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