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Hub-airport congestion pricing and capacity investment

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Abstract

This study examines hub-airport congestion pricing and capacity investment using a simple hub-spoke network model, in which hub-carrier scheduling causes both schedule delays and congestion delays. The “fixed-proportion assumption” is removed. We find the following. (i) A public hub airport requires both per-flight charges, which must be movement-related but cannot be weight-related, and discriminatory per-local and per-connecting passenger charges to reach the first-best outcome. (ii) Either weight-related per-flight charges or the marginal-operating-cost (MOC) pricing on local and/or connecting passengers cannot reach the first-best. (iii) First-best charges can lead capacity investment to be socially efficient. However, weight-related per-flights charges result in under-investment, whereas the MOC pricing results in over-investment in runway capacity. (iv) Private hubs that charge positive movement-related per-flight charges subsidize passengers through per-passenger charges. Finally, (v) movement-related per-flight charges lead private hubs to overinvest, whereas weight-related per-flight charges lead to either over- or under-investment.

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[Lin, Ming Hsin]Faculty of Economics, Osaka University of Economics, 2-2-8 Osumi, Higashiyodogawa-ku, Osaka 533-8533, Japan

[Zhang, Yimin] China Europe International Business School, 699 Hongfeng Road, Pudong, Shanghai, 201206 China


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Source

Transportation Research Part B: Methodological

ISSN:1879-2367

Year:2017

Volume:101

Page:89-106

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