Can Private Airport Competition Improve Runway Pricing? The Case of San Francisco Bay Area Airports

Travelers and airlines are frustrated by long and costly travel delays at public airports that are attributable to runway charges that do not account for aircraft congestion. Because the inefficient charges are likely to persist, we explore whether private airport competition could lead to more efficient charges that improve travelers’ welfare, increase airlines’ profits, and enable the airports to be profitable. We use the San Francisco Bay Area for our assessment and identify important conditions to achieve those outcomes, including competition among separately owned airports, bargaining between airports and airlines, and the ability of airports to differentiate prices and service.