Evaluating the potential impact of alternative airport pricing approaches on social welfare

Existing approaches to the economic regulation of airports are currently under (or just completed) review in the UK and New Zealand. One of the most critical issues facing policy-makers is whether it is preferable to adopt a single-till or dual-till approach. This paper aims to analyse the potential loss of social welfare as a result of adopting a single/dual-till approach in three airport pricing scenarios. The results show that the dual-till approach is desirable when aeronautical capacity is fully utilised or already over-utilised, while the single-till approach is preferable where excess capacity exists.