Allocation of infrastructure cost in the air transport sector

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Juan Carlos Martin
Concepcion Roman
Augusto Voltes-Dorta
Heike Link
Riccardo Enei

This report highlights the main results obtained in WP6 regarding the allocation of infrastructure cost in air transport sector. In this deliverable, it has been shown that there are important economies of scale in airport operations, and, thus, it can justify the current trend of capacity expansion programs observed in major hubs. For the year 2006, the range of estimated economies of scale varies between 4.36 and 1.23, with an average value of 1.75. A basic methodology was proposed in order to analyze the likely level of output at which the economies of scales would be exhausted. The industry's minimum efficient scale (MES) was calculated to be at 2.27 million ATM737. The most interesting conclusion to draw from this result is that, within the current technological frontier, the world's leading airports will continue to benefit from scale economies in the provision of infrastructure for air transportation and commercial activities until they reach between two or three times their current scales.

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