An Econometric Analysis of Airport Costs

An Econometric Analysis of Airport Costs


H Link, German Institute for Economic Research, DE; V Himanen, JP Transplan, FI



Within the context of the EU policy on infrastructure charging several research projects (for example ExternE, UNITE, RECORDIT) have dealt with analysing the cost behaviour and cost structure of transport modes and with deriving the charging-relevant social marginal costs. This research has mainly focused on road and rail and on the quantitatively most important cost categories such as environmental costs and congestion costs. Less attention has been paid to other modes such as aviation or waterborne transport, on the one hand due to more severe data problems in these sectors, but also due to the fact that charging policies for road and rail have the highest priority on the political agenda. While a considerable amount of literature exists on cost function analysis for airlines, cost studies on airport infrastructures are very rare. For the few that are available only limited data is revealed. This paper aims at closing this gap and contributing to a better understanding of the specific cost structure and cost behaviour of airports. It presents the results of research on airport infrastructure costs which was conducted in the EU funded project UNITE. The analysis refers to the airport of Helsinki-Vantaa and aims to describe and analyse the cost structure of infrastructure services produced by the airport, and to derive short term marginal costs for these services. The research was oriented towards infrastructure services but excludes other services such as transport operator services, commercial services and public sector services and cargo services related to non-aeronautical activities. Services for freight flights on the aeronautical side are included.

For this research we had access to hourly data on staff per airport service category and on aircraft movements and passengers, divided by different types of flights (arriving/departing/national/international etc.). The data refer to 2 weeks (one summer and one winter week) in 2000. The research has employed i) a cost disaggregation approach to analyse the structure of costs and importance of different costs per service category, and ii) an econometric approach (multivariate time series analysis) which analyses the relationship between the number of staff and aircraft movements and passengers respectively.

The main result of the multivariate time series analysis was that the total number of personnel follows an hourly pattern: very low occupancy during the night, rapid increase in the morning, rather stable occupancy during daytime and then straight reduction towards midnight. When considering different service categories, it can be noticed that on average all follow the same pattern except the Manoeuvring Area Services where the number of personnel decreases only very slightly during the night. Many more people work in Passenger Services than in any other service. The number of personnel is, in principle, paralleling the number of aircraft movements and passengers. However, there were limits so that some minor changes could be neglected and the big ones paralleled in a slow fashion.
Within a series of regression models the number of personnel in infrastructure services was explained by a set of independent variables representing traffic volumes, extra salaries for evening and night work, and dummies for weekends and seasons. With these models it was possible to derive (short-run) marginal costs measured in person-hours. According to our analysis, an extra aircraft movement needs on average one person-hour more from the airport personnel. Expressed in monetary term, marginal costs amount to Û 38 for an extra aircraft movement.

However, the currently estimated models face the problem that there is some autocorrelation in the residuals. Research to be completed in spring will explore the capability of other models (ARIMA-type of time series models) to better cope with these problems. The above marginal cost can therefore be considered only as the best current estimate, which hopefully will be confirmed or changed through future research.


Association for European Transport