Managing Airport Capacity and Demand: An Economic Approach

This paper reviews major research trends and opportunities in airport demand and capacity management from an economic perspective. Airport capacity constraints lead to operational congestion and delays, which have become major threats to the aviation industry. They impose large costs on airlines and their passengers. Uncertainty in demand or unexpected events can cause a mismatch between capacity and demand, resulting in either capacity over-supply, with a decrease in efficiency, or airport congestion over an extended period. Moreover, airport capacity is rather difficult to define due to its multi-faceted and dynamic nature, and it depends both on the available infrastructure and on operating procedures. The non-linear relationship between airport capacity and on-time performance offers guidelines for congestion mitigation through demand and capacity management. This paper explores and produces an in-depth understanding of the capacity and demand balance problem and provides a roadmap for including economic concepts when evaluating airport capacity expansions.