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J Regul Econ (2010) 37:142161
DOI 10.1007/s11149-009-9110-7
ORIGINAL ARTICLE
Privatization, regulation and airport pricing: an empirical analysis for Europe
Germ Bel Xavier Fageda
Published online: 10 November 2009
Springer Science+Business Media, LLC 2009
Abstract This paper examines factors determining airport charges. Using data for 100 large airports in Europe, we nd that they charge higher prices when they move more passengers. Additionally, competition from other transport modes and nearby airports imposes some discipline on the pricing behavior of airports. Low-cost carriers and airlines with a high market share seem to have a stronger countervailing power. We also nd that private airports not regulated charge higher prices than public or regulated airports. Finally, the regulation mechanism does not seem to inuence substantially the level of airport charges.
Keywords Privatization Regulation Pricing Air transportation Airports
JEL Classication L33 L43 L93
1 Introduction
Airport management is undergoing a major reform process in many countries. Indeed, the privatization of management companies, the changes associated with price regulation and the competition between airports in the same geographical area are all very
G. Bel (B) X. Fageda
Dep. Poltica Econmica i EEM - UB, Universitat de Barcelona (GiM-IREA), Avd Diagonal 690,
08034 Barcelona, Spain
e-mail: [email protected]. Fageda
e-mail: [email protected]
G. Bel
Barcelona Graduate School of Economics (BGSE), Barcelona, Spain
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Privatization, regulation and airport pricing 143
much the current object of discussion. The growing economic importance of airports, the intensity of competition between airlines and the budget restrictions imposed by governments on infrastructure investment explain, to great extent, the reform initiatives in airport policies.
Against this background particular attention should be given to the potential market power of airport operators, bearing in mind that the extent to which they choose to exploit their market power will depend on the specic characteristics of each airport (Starkie 2002; Gillen 2008). Thus, it is to be expected that airports with the heaviest volume of trafc (particularly if congested) will be most susceptible to x high prices to the airline operators. Likewise, it is to be expected that those airports that serve as a hub for an airline network are more likely to x high prices.
Furthermore, airports with a high volume of long distance trafc and those located on islands are less vulnerable to...