DOI: 10.69554/aruw5100 ISSN: 1750-1946

Risk-sharing models between airports and airlines for infrastructure expansion: Ex post evaluation of the fourth runway at Frankfurt Airport

Christoph Klingenberg, Juliane Wutzler, Branko Bubalo
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Expanding airport capacity through additional runways is the most effective way to ease air traffic congestion, yet such projects require high investments and long planning horizons but offer slow amortisation. Traditionally, the entire financial risk of planning, construction and operation rests with the airport operator. This paper proposes a risk-sharing model between airports and airlines that redistributes part of that risk. The model introduces a ‘fee freeze’ mechanism: the airport guarantees stable unit fees calculated on a baseline of aircraft movements, while airlines commit to meeting this baseline. If traffic falls short, unit fees rise to offset the shortfall; if traffic exceeds the baseline, fees are reduced, ensuring revenue neutrality. The model is applied retrospectively to Frankfurt Airport’s fourth runway, commissioned in 2011 after more than a decade of planning and nearly three years of construction. A comparison of actual traffic and revenue with projections under the proposed model shows that the discounted payback period could have been cut from 23 to 14 years so that a positive net present value would have been reached by 2025 rather than 2034. These improvements reflect stagnating flight numbers in the years following commissioning, with traffic volumes only surpassing their 2007 peak in 2018–2019. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.

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