Airport charges, economic growth, and cost recovery

This paper shows that ‘strict’ financial break-even for airports may not be socially desirable. To maximize social welfare, airports should be allowed to take losses or make profits at different times while achieving break-even only in the long run. In particular, with economies growing over time, socially optimal pricing for a new airport can involve deficit in its early years and surplus in its later years. This result has practical policy implications for the newly-built or expanded airports especially in the Asia-Pacific region.