Choice of Policy Instruments with Endogenous Quality: Per‐Passenger and Per‐Flight Airport Charges in Japan*

Abstract

This study empirically investigates how two types of airport charges (per-passenger and per-flight) differentially affect airfares, service quality (flight frequency), and welfare. A structural model endogenizing airfares and flight frequency is estimated with data on Japanese domestic routes and then used for simulation analyses. The results reveal that per-passenger charges significantly raise airfares, with an average pass-through rate of 97.5 per cent, and reduce flight frequency. Per-flight charges decrease flight frequency but have little effect on airfares. The socially preferred type of charges differs across routes: per-passenger charges tend to be socially preferred on larger routes. I. INTRODUCTION BECAUSE THE AIRLINE INDUSTRY IS AN ESSENTIAL INFRASTRUCTURE forlong-distance transportation, 1 fares and service quality in the industry have widespread influence on the economy. They are likely affected by airport charges, which are usually paid by airlines to airports and account for a relevant share of airlines' operating costs: approximately 5.9 per cent for airlines *This work was partly carried out when the author was at Sapporo Gakuin University. I thank the Editor for helpful guidance. I am grateful for the helpful comments and suggestions by the two anonymous referees, Nobuo Akai, Achim I. Czerny, Akio Kawasaki, Ming Hsin Lin, Jun Nakabayashi, and participants at many conferences and seminars. I also thank Shingo Yamazaki for his help in calculating the derivatives of the demand function.

Airports as Platforms: Consequences for Antitrust Policy

“…Важное свойство аэропорта как платформы -управление структурой цен, особенностью которой является то, что изменение аэропортом цен для авиакомпаний или других (например, обслуживающих) компаний, которые подключаются к платформе, чтобы осуществить трансакцию, приводит к изменению цен для контрагентов этих компаний [Doi, 2022]. Это, в свою очередь, за счёт косвенных сетевых внешних эффектов может приводить к изменению решений авиакомпаний (например, изменению географии или регулярности полётов, выбора самолетов с другими характеристиками).…”