Department of Economics

Pricing Canadian Airports

Department of Economics 
University of Delaware
Working Paper #2009-02

Pricing Canadian Airports

Joseph I Daniel

Congestion pricing of Canada’s four largest airports would save between seventy-two and one-hundred-five million dollars annually. Social cost of each aircraft movement would decrease by several hundred dollars at Toronto and Vancouver, and by about fifty dollars at Calgary and Montreal. Toronto currently experiences this congestion in spite of its slot control system. Congestion fees would be less than current weight-based landing fees on average. At projected traffic growth rates, social costs of landings and takeoffs would remain below current levels for at least five years—postponing the need for additional capacity. A stochastic bottleneck model indicates these substantial welfare gains regardless of whether dominant airlines internalize their self-imposed delays. This paper reports equilibrium congestion fee schedules by time of day and calculates equilibrium traffic rates, queuing delays, layover times, and connection times.

JEL Codes: R4, H2, L5, L9

Keywords:  Airport Congestion Pricing, Stochastic Queuing, Bottleneck Model, Slot Constraints

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