Airport charges and marginal costs for Spanish airports before the process of partial privatization

Abstract

Airport pricing is considered as one of the most relevant issues for policymakers. According transport policy, pricing schemes should be at least partially based on marginal costs. This article aims at comparing the most relevant aeronautical airport charges with their corresponding marginal costs for the Spanish airports in the period before the partial privatization process. To that end, we have built very detailed airport charge variables, and then, have estimated a flexible short-run variable cost function system using a panel of thirty-five airports over a 6-year period. The results show that the evolution of aeronautical airport charges does not follow the trend of marginal costs. Moreover, these charges are set above the shortrun marginal costs with the exception of the smallest and insular airports. Finally, we find the existence of non-neutral technological change and excess of capacity for the Spanish airports.