The likely resurgence of air traffic in the U.S. means that airport congestion is a problem that must soon be confronted by policy makers. As part of their policy response, it is probable that some form of congestion pricing will be imposed at selected U.S. airports in the relatively near future. The theory developed in this paper, which extends the results of Brueckner (2002), provides an important guide for the formulation of congestion pricing rules. In particular, the theory says that the congestion tolls levied on the various airlines at a particular airport should generally be different, with the tolls being inversely related to a carrier's airport flight share. Internalization of airport congestion is the reason for this inverse relationship. In operating another peak flight, a carrier takes account of the congestion damage imposed on the other flights it operates. If these flights account for a large share of the airport's traffic, then most of the congestion created by the additional flight is internalized, justifying a low toll. By contrast, if the carrier operates only a few of the airport's flights, then little internalization occurs, and a high toll is needed to force the carrier to take into account the congestion damage it causes. The resulting flight-share rule is easy to implement, and it could help policymakers design proper toll systems at U.S. airports.

This paper examines the relationship between the control of airport slots by major airlines and their incentives to engage in service quality. We investigate a set of airline strategies regarding possible practices of slot hoarding and slot concentration through mergers aiming at erecting airport barriers to entry. We develop an econometric model of flight disruptions by allowing an integrated management of flight delays, cancellations, aircraft size, price and passengers per flight. We consider the case of the domestic airline industry in Brazil. We find evidence of the internalization of congestion externalities by dominant carriers. We also have some evidence of schedule padding, a strategic trade-off between delays and cancelations, and slot hoarding following a merger. Our results suggest that carriers intensify the internalization of congestion externalities when slot flight concentration increases.

This paper develops an analytical framework for airport congestion pricing by considering variable passenger time costs. We find that, first, congestion delays will not be fully internalized at the carrier level under different market structures, including those airports dominated by a monopoly airline. Therefore, congestion pricing is necessary regardless of the market structures. Second, although congestion pricing is welfare-improving, it may not be Pareto-improving. This might explain why congestion pricing is unpopular in the real world.