Airport peak-load pricing revisited: The case of peak and uniform tolls

March 10, 2014

This paper develops a two-period model with peak/off-peak demands that incorporates three types of passengers：(1)passengers who are scheduled for peak departure and depart during the peak period, (2) passengers who are scheduled for peak departure but depart during the off-peak period because of congestion, and(3)passengers who are scheduled for off-peak departure. An increase in peak supply may turn own type-1 passengers into type-2 passengers,which is called self-imposed schedule delay. Our main result is that carriers with market power internalize self-imposed schedule delay costs.The investigation of a uniform-toll regime reveals that the welfare-optimal uniform toll corrects for external schedul delay only if schedule delay cost is sufficiently high.