Airport infrastructure investments and valuing expansion decisions using the compound real option approach

Polat L., Battal U. (.

JOURNAL OF AIR TRANSPORT MANAGEMENT, vol.91, 2021 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 91
  • Publication Date: 2021
  • Doi Number: 10.1016/j.jairtraman.2020.102011
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Hospitality & Tourism Complete, Hospitality & Tourism Index, Index Islamicus
  • Keywords: Compound real option, Airport infrastructure investment, Growth option, VALUATION
  • Anadolu University Affiliated: Yes


This study examines the value and the best time period to expand the investment of an airport infrastructure project by operating a flight school, skydiving center and guesthouse on the airport using compound real options and net present value methods. The results demonstrate that real option value of the project is more optimistic than traditional valuation method and the best time for expansion investment is eighth year of the operation. Moreover, sensitivity analyses showed that, the strongest variables effecting the project are volatility and discount rate. The findings show how real option methods and sensitivity analysis can contribute to future decisions of the managers.