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SESSION IV
the airline problem


8 The economist's view


S. WHEATCROFT
Air Transport Consultant


It is generally assumed that economists always say that everything costs too much: the term 'improved economics' is usually synonymous with lower costs. But economics is more properly concerned with the relationship between costs and revenues. Hence, it may not be uneconomic to incur higher costs if these produce higher quality products which can be sold for higher revenues. Economists are therefore concerned with quality as well as costs. The airport problem, from the point of view of the airline economist, is that of rising costs which tend to be accompanied by falling quality of service.

The extent to which the indirect economic and social benefits of airports should be charged to the communities which benefit should be considered, together with the role of revenues from non-aviation airport users.

In considering the importance of airport costs for the airlines, three aspects must be examined, i.e., the level of landing charges, the level of rentals, and the indirect effects of airport design on traffic handling and aircraft operating costs. A general analysis of the relationship between terminal costs and length of haul will be given. The importance to long haul and short haul airlines of the level of landing charges and the method by which they are assessed will be considered and charging systems will be discussed--particularly differential charging.

The nature and extent of airline costs at airports will be examined with reference to the economies of increasing the scale of operations and the economically adverse effect at very large airports.

In considering the quality of airport service, one must ask what the airlines, passengers and shippers really want at the airports, and whether they are getting it--or are likely to get it.


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