Airports are increasingly encouraged to operate as normal firms without any financial governmental aid. Also the Dutch government is preparing a privatisation of the largest airport in the Netherlands: Schiphol. However, this does not mean that airports are operating without any governmental intervention. Airports have some characteristics, which make normal economic functioning impossible. Due to the monopolistic economic position price regulation of airports is very often the case. This paper explores issues playing an important role in (regulated) pricing by airports. Authorities have different possibilities for preventing prices being too high and thus inefficient. In order to realise a more appropriate (cost-oriented) level clear insight into the cost structure of airports is necessary. From this, it appears very difficult for airports (and governments) to set efficient prices. Firstly, marginal cost prices are very hard to define due to the existence of common and external costs. Secondly, marginal cost pricing will most likely lead to losses for the airport caused by the large amount of fixed costs. Price regulation is therefore not straightforward and needs clear insight into the cost structure of the airport in order to set 'second best' prices. (A) For the covering abstract of the conference see ITRD E206647.
Abstract