Airport charges, economic growth, and cost recovery

This paper shows that "strict" financial break-even for airports may not be socially desirable. To maximize social welfare, airports should be allowed to take losses or make profits at different times while achieving break-ev en only in the long run. In particular, with economies growing over time, s ocially optimal pricing for a new airport can involve deficit in its early years and surplus in its later years. This result has practical policy impl ications for the newly-built or expanded airports especially in the Asia-Pa cific region. (C) 2000 Elsevier Science Ltd. All rights reserved.