Essays on airport and airway congestion

Abstract

Runway and airspace congestion are the primary causes of flight delays in the US. These delays cost airlines and airline customers billions of dollars per year. This thesis consists of two essays. The first essay focuses on several of the commonly proposed market-based solutions to airport congestion. Most of the literature on these market-based solutions has assumed that these remedies are justified by welfare economics, but there is relatively little focus on these justifications. We explore the economic arguments for and against using various market-based approaches to treating airport congestion. The second essay examines the relationship between aviation infrastructure pricing and congestion. Aviation taxes (and some airport fees) are currently designed to tax large aircraft more than small aircraft and flights with more passengers more than flights with few passengers. Several authors have argued that these taxes and fees create an incentive system for airlines to use small aircraft with high frequency, which exacerbates the congestion problem. We study this effect by developing a game theoretic model of airline behavior.

(cont.) Using this model, we are able to find a pure-strategy Nash equilibrium behavior for any given set of taxes and fees. These equilibrium results allow us to directly test the potential effects of changing the fees and taxes. We propose an alternative system of taxes and airport fees that charges all similar flights equally, regardless of size, revenue, or the number of passengers. We find that adopting these "flat" taxes and landing fees - i.e. aircraft of all sizes pay equal amounts - would have substantial benefits. The model predicts that the change would reduce congestion levels while making air travel more affordable.