The use of airport charges for funding general expenditures: The case of Chile

Abstract

Chile increased boarding charges for international flights to finance campaigns for promoting the country as a tourist destination and to support a 'Fight Against Poverty' fund. We present a comparative review of airport charges in various countries around the world using a non-parametric comparative efficiency technique. The results indicate that average rates are relatively low in Chile considering traffic levels and quality of service provided. Nevertheless, financing non-airport activities from these charges may have adverse implications. It is an expensive way to finance public spending relative to alternatives and it would be more efficient if tourism promotion campaigns were funded by the industry itself. Increasing boarding charges increases travel costs which is counterproductive to the promotion of Chile as a tourist destination: among international passengers, the tourist segment is the most price-sensitive.