Economic Rents at Heathrow Airport

11 Pages Posted: 12 Mar 2020

Date Written: February 19, 2020

Abstract

The Paper challenges the common supposition that (scarcity) rents at Heathrow airport accrue from airlines charging efficient clearing prices and instead suggests that because of oligopolistic practices, much of the rent at Heathrow is quasi-monopoly rent. It also suggests remedies that could be implemented in the short term before more runway capacity is added and that if Heathrow airlines matched the average load factors of those at London’s other major airport, Gatwick, average fares might be as much as 5 per cent lower.

Keywords: Heathrow Airport, scarcity rents, airline oligopoly, slot allocation, bilaterals

JEL Classification: D42, D43, D45, L41, L49, L51, L93, R49

Suggested Citation

Starkie, David Nicholas, Economic Rents at Heathrow Airport (February 19, 2020). Available at SSRN: https://ssrn.com/abstract=3541027 or http://dx.doi.org/10.2139/ssrn.3541027

David Nicholas Starkie (Contact Author)

Case Associates ( email )

1 Heddon Street
London, W1B4BD
United Kingdom

HOME PAGE: http://www.casecon.com

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