DP8618 Regulation, Privatization, and Airport Charges: Panel Data Evidence from European Airports

Author(s): Volodymyr Bilotkach , Joseph A. Clougherty , Juergen Mueller , Anming Zhang

Publication Date: October 2011

Keyword(s): airports , airport charges , regulation , privatization , single-till , hubs

JEL(s): L33 , L93 , R40 , R48

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP8618.asp.asp

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 first analysis of the impact of different regulatory policies and privatization on airport charges in a panel data setting where fixed 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, and -- tentatively -- when 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.