Residual, compensatory and hybrid agreements are three types of airport use agreements in the United States. Increased inefficiency can jeopardize the potential benefits of residual agreements. Bilateral contracts are an integral part of the working relationship between airports and airlines. In the United States, the three types of airport use agreements are the residual method, the clearing method and the hybrid method. As part of a residual agreement, the financial risk of the host airport is borne by the signatory airlines and, in return, the signatory airlines pay reduced fares for users. However, under a compensation agreement, airports bear their own financial risks in the absence of a undersigned airline. A hybrid agreement combines the characteristics of residual and compensatory agreements. Under a hybrid agreement, for example, airports generally bear their own financial risks in operating the terminal, while the signatory airlines take responsibility for the financial risks associated with operating the airfield. The purpose of this document is to determine whether these three types of trade agreements affect the operational effectiveness of airports. Based on annual data from 59 U.S.
Hub airports for 2009-2016, we find that airports with residual agreements tend to have lower operational efficiency. This means that, although the signatory airlines pay advantageous airport fees and charges under a residual agreement, an increase in airport inefficiency may jeopardize the potential benefits of the agreement. As access to this document is limited, you can search for another version of the document. Airports that accept the rest of the agreement are less efficient than others. If you have written this article and are not yet registered with RePEc, we advise you to do so here. This way, you can link your profile to this item. It also allows you to accept possible quotes on this article of which we are not sure. If you know the missing items that are using them, you can help us create those links by adding the corresponding references in the same way as above for each reference item.
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