This paper outlines procedures for airport development and control, involving economic decisions on pricing and investment, welfare criteria being used to derive "second-best" solutions within a constrained situation. A general solution for both static and dynamic optimization is developed, and a numerical illustration is given. The resulting methodology has applications beyond the airport context. The welfare measure used in this paper is economic surplus. The methodology is flexible, and can simply be extended in spatial and dynamic terms to produce an analytical framework for the exploration of scale economies, regional planning, and so on. The strength of the approach lies in the integration of the demand and supply functions, not only through the airport price, but also through airline schedules, market systems and the direct effect of capacity provision upon journey cost. It is concluded that the correct pricing solution will be based exclusively upon short-run costs--a particularly important element being congestion--but errors in pricing policy will not cause great welfare loss. The expansion criterion, however, is extremely important, and the existing criteria may lead to misleading planning dates for expansion and consequently large welfare losses. As far as this optimising process is concerned noise costs can be treated like any other component of systems costs (G), the real problem being their measurement and possible "weighting", and there is nothing useful that can be added to the argument within the scope of this paper. Much more serious is the possible distortion contained in the attempt to plan the airports separately from the airways and aircraft which they serve. In other words, we should plan the whole air transport system as an integrated whole, rather than wag the dog with a somewhat ineffectual tail.

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  • Corporate Authors:

    London School of Economics and Political Science

    Houghton Street, Aldwych
    London WC2A 2AE,   England 
  • Authors:
    • Fitzgerald, EVK
    • Aneuryn-Evans, G B
  • Publication Date: 1973-9

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  • Accession Number: 00155672
  • Record Type: Publication
  • Source Agency: Massachusetts Institute of Technology
  • Files: TRIS
  • Created Date: Aug 31 1977 12:00AM