Contract Design,Financing Arrangements and Public Ownership—An Assessment of the US Airport Governance Model

Abstract

US airports negotiate legally binding contracts with airlines and finance large investment projects with revenue bonds. Applying insights from transaction cost economics, we argue that the observed variation in contractual and financing arrangements at US airports corresponds to the parties' needs for safeguarding and coordination. The case evidence presented reveals that public owners set the framework for private investments and contracting. We suggest that airline contracts and capital market control result in comparative efficient investments and act as a check on the cost inefficiency typically linked to public ownership.     

Accuracy of distance‐based travel time decomposition in probe vehicle systems

Probe vehicle data (PVD) are commonly used for area‐wide measurements of travel time in road networks. In this context, travel times usually refer to fixed edges of an underlying (digital) map. That means measured travel times have to be transformed into so‐called link travel times first. This paper analyzes a common method being applied for solving this task (distance‐based travel time decomposition). It is shown that, in general, its inherent imprecision must not be neglected. Instead, it might cause a serious misinterpretation of data if potential errors in the context of travel time decomposition are ignored. For this purpose, systematic as well as maximum deviations between “decomposed” and “true” link travel times are mathematically analyzed. By that, divergent statements in the literature about the accuracy of PVD are harmonized. Moreover, conditions for the applicability of the so‐called distance‐proportion method are derived depending on the permitted error level. Three examples ranging from pure theory to real world confirm the analytical findings and underline the problems resulting from distance‐based travel time decomposition at local level, for example, at individual intersections. Copyright © 2013 John Wiley & Sons, Ltd.