Airport pricing and regulation under passenger demand uncertainty. Issue 1 (31st December 2022)

• Record Type: Journal Article
• Authors: Liu, Wen-Jing; Gong, Xu; Li, Zhi-Chun
• Is Part Of: Transportmetrica. Volume 10:Issue 1(2022)
• Page Start: 1184
• Page End: 1205
• Publication Date: 2022-12-31
• Subjects: Airport pricing -- single-till regulation -- dual-till regulation -- passenger demand uncertainty -- regulatory level -- risk aversion; Transportation -- Mathematical models -- Periodicals; 388.015118
• DOI: 10.1080/21680566.2022.2026837
• Languages: English
• ISSNs: 2168-0566

Abstract

Abstract : This paper addresses the airport pricing and regulation issues in the presence of passenger demand uncertainty. The regulatory schemes concerned include the single-till and dual-till price-cap regulations. A vertical-structure model is presented to determine the optimal airport charges under the single-till and dual-till price-cap regulations. The effects of the airport regulatory level and the risk-averse preferences of stakeholders in the system on airport pricing are also examined. The results show that at a high passenger demand uncertainty level, the dual-till regulation would outperform the single-till regulation in terms of social welfare. However, at a low passenger demand uncertainty level, which regulation is better depends on various factors, such as the regulatory level and risk-averse preference.