Examining the effectiveness of market-based policies: The case of airside airport congestion

This research critically examines the role of government intervention in economic affairs by looking at the case of airside airport congestion. There has been movement in the U.S. in the past few decades away from government intervention and towards the use of market mechanisms to achieve public policy and planning ends. These include ideas such as privatization, deregulation, and congestion pricing. This dissertation looks at how those ideas have manifested themselves in the airline industry. In particular, it looks at how these ideas have affected proposed policy solutions for the biggest problem in the industry before its recent economic troubles, namely, airside airport congestion. The first part of the dissertation provides a brief history of government intervention in economic affairs and some background on the airline industry. This is followed by two sets of literature reviews; the first examines the literature on airline deregulation and the second looks at the literature on airport peak pricing, which is the most commonly proposed solution to airport congestion. These reviews reveal important flaws in the theoretical basis for reliance on pricing mechanisms rather than regulatory ones. Through an examination of Boston, New York and London, the research reveals that peak pricing at airports has not actually been used as a market mechanism in reality, and instead has been used only as a regulatory policy cloaked in the language of the market. This leads to the conclusion that new approaches for solving airport congestion are needed. The dissertation suggests that ground transportation substitution and more comprehensive transportation planning are needed as part of a broader attack on the problem. If theory is to serve as a basis for policy and planning practice, it must be better grounded in the facts of the situation.