Passenger Facility Charges in Privatised Mexican Airports: Dynamic Panel Data Evidence on the Domestic Market

Airport pricing is a key determinant of airport revenue, but has been studied little outside of Europe and the United States. We examine the determinants of domestic Passenger Facility Charges (PFC) in privatised airports over a nine-year period (2006–14) in Mexico. Using a GMM model, we find that dual-till price cap regulation has had a significant effect on PFC during the post-privatisation period; airports can capture airlines' market power when setting PFC, and airports increase PFC when domestic passengers become more important. These findings illustrate the actual status of Mexican privatised airports and complement the empirical airport pricing literature.