On the Subsidization of (Regional) Airports -An Approach to Stop the Waste of Tax Money

Abstract

Since the ending of the cold war, many former military airbases have been converted for civilian use. This has caused the German airport network to become very dense. Nowadays airport catchment areas are overlapping and many airport-operators depend on state aid. Some lobbyists blame the decentralized provision of infrastructure for over-capacities and loss-making airport-operators. However, this paper shows that a shift of competences from the local to the federal level would breach the principles of public finance. Most essential is an imperative combination of provision and financing competences in order to avoid misleading incentives for local decision makers.