AIRPORTS AND CONGESTION: A PROBLEM OF MISPLACED SUBSIDIES

Although federal airport subsidy programs have strong adherents, the case in favor of them is an uneasy one. The beneficiaries of these subsidies are mainly higher income groups. The is no reason to suppose that airports and aviation make a contribution to the nation's economic growth that is more important than many nonsubsidized industries. Airports also create costs in the form of noise, air, and water pollution which suggest that their activities might be taxed rather than subsidized. For the purpose of this paper, however, one of the most important arguments against subsidies is that they increase congestion rather than reduce it. Charging below-cost prices also creates new users who lobby in behalf of continuing subsidies. Recent court decisions indicate that the pricing of airport services is legal. Pricing systems could be of two kinds. The first would impose peak-hour landing fees. These fees would have to be adjusted from time to time according to a "trial-and-error" procedure until queues declined to desired levels. The second kind would create landing rights or slots that would be vested in current users and be fully transferable. This would allow higher-valued users to purchase slots from lower-valued users, and thus improve airport efficiency. The rights need not be given in perpetuity. They could be renewable permits granted for 3-year periods. Neither of these pricing systems is likely to present large problems in implementation. But some experience with their operation could be gained through experiments at two or three airports that might last up to three years. The experiments could be funded under the planning grant authority of Public Law 91-258. They would produce information on the nature of airport demand, the extent to which prices can reduce congestion, and any unforeseen problems in administration.

  • Corporate Authors:

    American Enterprise Institute for Public Policy Research

    1150 17th Street, NW
    Washington, DC  USA  20036
  • Authors:
    • ECKERT, R D
  • Publication Date: 1972

Media Info

  • Pagination: 71 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00155615
  • Record Type: Publication
  • Source Agency: Federal Aviation Administration
  • Files: TRIS, USDOT
  • Created Date: Aug 31 1977 12:00AM