Airport charges and marginal costs for Spanish airports before the process of partial privatization

Ramón Núñez-Sánchez,Soraya Hidalgo-Gallego,Valeriano Martínez-San Román

doi:10.1016/j.tranpol.2020.08.012

Abstract

Airport pricing is considered as one of the most relevant issues for policymakers. According transport policy, pricing schemes should be at least partially based on marginal costs. This article aims at comparing the most relevant aeronautical airport charges with their corresponding marginal costs for the Spanish airports in the period before the partial privatization process. To that end, we have built very detailed airport charge variables, and then, have estimated a flexible short-run variable cost function system using a panel of thirty-five airports over a 6-year period. The results show that the evolution of aeronautical airport charges does not follow the trend of marginal costs. Moreover, these charges are set above the short-run marginal costs with the exception of the smallest and insular airports. Finally, we find the existence of non-neutral technological change and excess of capacity for the Spanish airports.

Highlights

In the last decades transport policies have faced a number of important challenges derived both from technological and institutional change in the airline sector and from the increasing importance of airport infrastructures as generators of economic activity
The centralized model of financing and management of Spanish airports is unique among economies of similar size
Despite a failed attempt to assimilate the model through the privatization of the two main airports, a partial privatization of the whole airport system was opted for

Summary

Introduction

In the last decades transport policies have faced a number of important challenges derived both from technological and institutional change in the airline sector and from the increasing importance of airport infrastructures as generators of economic activity. In this sense, airport pricing is considered as one of the most relevant issues for policymakers. Lu and Pagliari (2004) point out that one of the most critical issues facing policy makers is whether it is preferable to adopt a single-till regulation, where airport charges are set to cover both aeronautical and commercial activities, or a dual-till approach, where only aeronautical activities are taken into consideration. Other authors obtain similar results in later theoretical models such as Czerny (2006)

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