Airport fees flying higher
The Civil Aviation Authority (CAA) – the regulatory body for Britain’s airports – has allowed the main airport operator BAA to increase substantially the landing charges it levies on airlines. The airlines have reacted angrily and argued that the higher charges will simply be passed on to passengers in the form of higher fares.
Q&A: Airport landing fees BBC News Online (11/3/08)
BAA to raise airport landing fees BBC News Online (11/3/08)
Fares will rise as fees cap is lifted Guardian (cartoon) (12/3/08)
Fares will rise as fees cap is lifted, airlines warn Guardian (12/3/08)Video
BAA to raise landing fees BBC News Online
Questions
| 1. | Explain the regulatory system in operation for the control of landing fees at UK airports . |
| 2. | Explain why the CAA has increased the landing fees that BAA can charge for planes landing at UK airports. |
| 3. | Is raising landing fees an efficient method of internalising the externalities associated with air travel? |
| 4. | Evaluate the extent to which the higher landing fees will be passed on to airline passengers. Use diagrams as appropriate. You may also like to consider the relevance of the price elasticity of demand for air travel in determining the extent to which the higher landing fees can be passed on by the airlines. |