Congestion at Airports: The Economics of Airport Expansions

Congestion and subsequent delays have been prevalent in many United States airports in recent years. A common response to congestion, championed by many community leaders, is to expand capacity by constructing new runways and terminals. Airport expansions are costly, complex, and controversial. The authors use basic economic theory to analyze congestion at those airports that are part of an air transportation system. They describe how benefit-cost analysis is used to assess the desirability of airport expansions. Many of the key points are illustrated in the context of Lambert-St. Louis International Airport. Also examined are two controversial aspects of expansions -- the displacement of people and businesses and the effects of airport noise. Finally, congestion-based pricing of landing fees as an alternative to airport expansions are discussed.