Landing fee including CO2 emission cost: an application to Spanish Airport

Abstract

The rapid growth in the air transport required to satisfy the increased air travel demand makes the upgrading of airport infrastructure around the world crucial however this also poses a serious environmental problem. Due to the expansion in air transport, the required additional airport capacity may in the near future be unsustainable at a global level. Thus, there is the need to establish an alternative to the traditional airport pricing structure for landing fees, which reflects the true cost that air market operators impose on others. Airport pricing policies must provide a sound guide for future investments, and at the same time they must reflect whether additional facilities are needed and at what price, by taking into account all the generated costs including environmental costs. This paper analyses one application of Ramsey Pricing on uncongested Spanish airport, by considering the CO2 emission costs as a valuable input.