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

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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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    6. Guthrie, Graeme, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Working Paper Series 3851, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Starkie, David, 2005. "Making airport regulation less imperfect," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 3-8.
    8. Zhang, Anming & Zhang, Yimin, 2003. "Airport charges and capacity expansion: effects of concessions and privatization," Journal of Urban Economics, Elsevier, vol. 53(1), pages 54-75, January.
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    13. Starkie, David, 2002. "Airport regulation and competition," Journal of Air Transport Management, Elsevier, vol. 8(1), pages 63-72.
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    1. repec:eee:trapol:v:61:y:2018:i:c:p:123-131 is not listed on IDEAS

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    Keywords

    Airport regulation; non-aviation revenues; price differentiation; single till; dual till;

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