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J Regul Econ (2012) 42:7394 DOI 10.1007/s11149-011-9172-1
ORIGINAL ARTICLE
Regulation, privatization, and airport charges: panel data evidence from European airports
Volodymyr Bilotkach Joseph A. Clougherty
Juergen Mueller Anming Zhang
Published online: 3 January 2012 Springer Science+Business Media, LLC 2011
Abstract This paper examines the determinants of airport aeronautical charges by employing a unique panel dataset covering sixty-one European airports over an eighteen-year period. We are able to extend the literature on the role of airports as an essential element in transport infrastructure by offering the rst analysis of the impact of different regulatory policies and privatization on airport charges in a panel data setting where xed effects can be employed to mitigate endogeneity concerns. Our main empirical results indicate that aeronautical charges are lower at airports when single-till regulation is employed, when airports are privatized, andtentativelywhen ex post price regulation is applied. Furthermore, hub airports generally set higher aeronautical charges, and it appears that price-cap regulation and the presence of nearby airports do not affect aeronautical charges.
V. BilotkachNewcastle Business School, Northumbria University, Newcastle, UK
J. A. CloughertyUniversity of Illinois at Urbana-Champaign, Champaign, IL, USA
J. A. Clougherty CEPR, London, UK
J. MuellerHWR, Berlin, Germany
A. ZhangUniversity of British Columbia, Vancouver, BC, Canada
V. Bilotkach (B)
City Campus East 1, Newcastle Upon Tyne NE1 8ST, UK e-mail: [email protected]
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74 V. Bilotkach et al.
Keywords Airports Airport charges Regulation Privatization Single-till Hubs
JEL Classication R40 R48 L33 L93
1 Introduction
Airports have always been viewed as an essential element in transport infrastructure; yet since the mid-1980s, airports have been increasingly recognized as full-edged business enterprises that provide a number of different services to airline industry customers (Doganis 1992; Winston and Rus 2008; Starkie 2008). Despite the increasing potential for airports to be innovative businesses that provide services beyond take-offs and landings (e.g., parking, concessions, retail and other related services), it must be recognized that airports generally exhibit many of the classic properties of local monopolies. The natural monopoly tendency implies that leaving these businesses unregulated might not be the best course of action from a social welfare perspective. Nevertheless, some countriessuch as Australia and the UKhave allowed many airports to freely set charges in an unfettered manner; though, even in these instances, airport service pricing...