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Evidence That Airport Pricing Works

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Publication Date: November 2007

Publisher(s): Reason Foundation

Author(s): George L. Donohue; Karla Hoffman

Topic: Transportation (Air transport)

Type: Report

Abstract:

This paper describes the results of research that
analyzed mechanisms for reducing congestion
and delays at LaGuardia Airport (LGA) in New York.
The findings should be equally applicable to any similarly
congested airport such as John F Kennedy (JFK),
Newark International (EWR) or Chicago O'Hare (ORD). Conventional economic wisdom suggests that
market-based mechanisms such as congestion pricing
and auctions are efficient in allocating scarce resources.
Both options charge higher fees for peak periods than
for off-peak periods, discouraging low-value flights from being scheduled in peak periods. In addition,
increasing per-flight cost is expected to encourage
airlines to up-gauge (substitute larger-capacity planes
for some flights), and therefore increase passenger
throughput.