The Economics of Airports

UCSD economist Richard Carson has an entertaining editorial in a San Diego paper about the errant economics of a new San Diego airport. A highly controversial subject, especially to those of us on the east side of La Jolla over which flights might roar in one new airport scenario, Carson brings some rigor to the rhetoric.

As he rightly points out, this is essentially a pricing problem. It’s not that San Diego doesn’t have an airport, although Lindbergh is admittedly a small, one-runway site, but the bigger issue that it misprices its services such that capacity is over-used by smaller jets, as opposed to bigger commercial carriers.

So, the solution:

The airport authority needs to put a price on
Lindbergh’s truly scarce resource, the limited number of takeoff and
landing slots available in different time periods, if Lindbergh is to
run smoothly.

Is this a radical new idea that has not been
carefully thought through? No, Logan Airport in Boston has been given
permission by the FAA and started pricing slots in different time
periods to get the desired number of takeoff and landings. Charging for
slots is the norm at popular European airports and, as a result,
relatively few small planes are used at such airports.

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  4. Andrew Odlyzko on Internet Economics, Internet Evolution, and Misleading Networking Myths
  5. Dan Gillmor & Wal-mart’s Economics

Comments

  1. Andy Nelson says:

    If you live in a major American city you may wonder why your airport is located where it is. In most cases it is there becuase a 27 year old university drop out with no formal training in urban planning or meteorology decided that that’s where it should be located. New technology tends to evolve randomly and then you are stuck with it for decades to come. But as Carson points out, you’re probably better off making the best of it rather than starting over from scratch.

  2. Andy — Nicely put. The trouble is, “making the best of it” is not a politically-compatible brain pattern. A new airport, like a new stadium, is not economically rational, but it is still a line item in the next election campaign. That’s why voters, when given better information about costs and compromises, are most often the deciding factor via referenda.