Airport pricing systems in europe and an application of Ramsey pricing to Spanish airports

This paper describes the landing fee structures which are prevalent at most European airports: a mix of weight-based landing fees, passenger fees, and other charges. The paper describes alternative pricing systems which emphasize economic efficiency rather than airport finance considerations. Finally the paper calculates the structure of landing fees for a hypothetical uncongested airport using a Ramsey pricing formulation with data representative of uncongested Spanish airports. Further research is necessary before recommending implementation because the elasticities of demand and operating costs with distance are borrowed from North American studies.     

Ramsey pricing including CO2 emission cost: An application to Spanish airports

The long-term growth in the air transport is leading to the need to expand airport infrastructure but this has serious environmental implications. Thus, there is the need to establish an alternative to the traditional airport pricing structure for landing fees, which reflects the overall costs that air transport operators impose on others. Airport pricing should provide a sound guide for future investments, and at the same time reflect whether additional facilities are needed and at what price, by taking into account all costs, including environmental costs. This paper analyses one application of Ramsey Pricing on uncongested Spanish airport, by considering the CO₂ emission costs as a valuable input.     

Road pricing in National Parks: a case study in the Yorkshire Dales National Park

Road user charging is typically associated with urban contexts, however, congestion at rural attractions is of increasing concern and road user charging may be considered as a suitable policy instrument. This paper investigates the issue of rural road pricing and presents the results of a survey of car-based visitors to Upper Wharfedale in the Yorkshire Dales National Park, which explores the potential impacts on mode and destination choice of a road user charging scheme, combined with a park and ride alternative. The scheme was found to be acceptable to 68% of the respondents, with nearly half opting to park and ride. The results are of particular interest in the light of the 1998 Transport White Paper that encourages pilot road user charging schemes in rural areas.     

Policy insights from the urban road pricing case studies

This article reviews and compares the results of four modelling case studies of urban road pricing implementation that were carried out for the MC-ICAM project. The studies all concern large cities in Western Europe (Paris, Brussels, Oslo and Helsinki) and they all examine phased implementation paths in which constraints on the set of policy instruments are progressively relaxed. However, the studies used different models that vary with respect to the endogenous dimensions of traveller behaviour, the level of detail in which road and public transit networks are represented, and assumptions about what policy instruments are available and what constraints apply.     

Monopoly and optimal nonlinear pricing: the case of route monopolies and heteregeneous demand in the air transport market

This paper explores the robustness of the one-dimensional screening model with respect to increasing the number of instruments and the number of characteristics. We study a case of nonlinear pricing (2 instruments (2 routes on which the airline provides customers with services), 2 characteristics (demand of services on these routes) and two values per characteristic (a low or a high demand of services on these routes)) and we show that none of the conclusions of the one-dimensional analysis remain valid. In particular, upward incentive compatibility constraint may be binding at the optimum. As a consequence, they may be distortion at the top of the distribution. In addition to this, we show that the optimal solution often requires bundling, while it is sometimes optimal for the monopolist to produce only one good or to exclude some buyers from the market. This means that the monopolist cannot fully apply his monopoly power and is better off selling two goods independently. We define all possible solutions in the case of a quadratic cost function for a uniform distribution of agent types and demonstrate that the range of services proposed by an airline is often larger than the corresponding range in demand.     

Urban transport pricing reform with two levels of government: A case study of Brussels

This paper analyses two challenges in the reform of urban transport pricing. First the construction of an optimal package of urban transport pricing instruments assuming one benevolent welfare maximizer. It is found that parking and tolling are the most important elements of the optimal package and that these policy instruments are sub-additive in their benefits. The second problem is the use of pricing instruments by different government levels: the urban government controls parking fees and the regional government controls a cordon toll. It is found that the overall efficiency losses in the Nash and Stackelberg equilibria are limited.     

Impacts of videoconferencing on business travel: the Norwegian experience

This paper assesses the impact of videoconferencing on business air travel. Results suggest that videoconferencing has only a limited effect on business air travel, with substitution rates of 2.5–3.5%. Thus, within the Norwegian market, videoconferencing is not considered a serious threat to the airline industry. The enterprises considered in this survey indicate low sensitivity to the threat of terror and the instability that has followed September 11 in the US. In Norway, air travel recovered after 4–5 months. Videoconferencing is expected to grow but remain supplementary to personal contact.     

Congestion pricing in the absence of demand functions

This paper enhances a trial-and-error implementation scheme of marginal-cost pricing on a transportation network, in the absence of explicit expression of the demand function. Link tolls and link flows are updated for the next trial with the revealed link flows for given current trial toll pattern. The method is quite simple, requiring only some function evaluations. Also, the step size is not required to be square summable, thereby leading to the improvement of the efficiency of the algorithm. The global convergence of the method is proved and some numerical results are reported to illustrate its performance.     

Bounding the efficiency of road pricing

This paper deals with the following question associated with congestion pricing in a general network with either fixed or elastic travel demand: what is the maximum efficiency loss of a general second-best pricing scheme due to inexact marginal-cost pricing in comparison with the first-best pricing or system optimum case? A formal answer to this question is provided by establishing an inefficiency bound associated with a given road pricing scheme. An application of the methods is provided for the practical trial-and-error implementation of marginal-cost pricing with unknown demand functions.     

Research challenges in modelling urban road pricing: An overview

This article introduces the contributions of this special issue on modelling of urban road pricing and its implementation. The issue focuses on the design of urban road pricing schemes, and their spatial and temporal impacts, using quantitative transport (and land use) models. The policy implications of road pricing, including welfare and equity aspects, are studied for Paris, Brussels and Oslo using state of the art planning models. The issue is completed with a study of public acceptability and the upcoming road-pricing trial in Stockholm, and a review paper on the history of thought and future prospects of road pricing.     

The role of perceived acceptability of alternatives in identifying and assessing choice set processing strategies in stated choice settings: The case of road pricing reform

In designing choice experiments, it is common to present a number of alternatives to a respondent and have them choose the most preferred alternative. However, respondents may ignore one or more alternatives which they deem unacceptable for various reasons. This possibility aligns with the idea of the ‘consideration set’ which influences the choice of an alternative given the choice set of interest. This paper uses an endogenous choice set model to investigate the influence that contextual effects and socioeconomic characteristics play in explaining variations in the choice sets considered by respondents when they reveal their preferences.     

The impacts of road tolling: A review of Norwegian experience

Road tolling has been used extensively for funding of national roads in Norway since 1982. The article, which is primarily based on review of literature, identifies the impacts of tolling in four key policy areas: economic efficiency, regional development, regional redistribution and democracy. Toll financing may change the ranking of projects but does hardly reduce construction costs. The recurrent budget has been quite stable and toll revenues therefore represent net additional resources for road investment. Regionally, tolling has led to a shift of road investments to more central areas. Tolling has increased local political influence compared to national influence.     

Noise charges in railway infrastructure: A pricing schedule based on the marginal cost principle

In order to mitigate the negative effects of transportation and to achieve a competitive transport sector, infrastructure charges in the European Union should be based on short-run marginal costs. This paper shows that railway-noise charges can be estimated using already obtained knowledge of monetary and acoustical noise evaluation. Most European countries have standardized calculation methods for total noise level, which can be used to estimate the marginal acoustical effect.     

Adjusting the Herfindahl index for close substitutes: an application to pricing in civil aviation

The Herfindahl–Hirschman index (HHI) is a well known concentration measure, which is both widely used and widely criticized. The main shortcoming of the HHI is its sensitivity for the relevant market definition, in terms of both geographical boundaries and in terms of product homogeneity. In this paper we develop an adjusted version of the HHI that accounts for close substitutes. We test the adjusted HHI empirically for civil aviation, using airfare data. Our results suggest that the adjusted index generates better results than the traditional indicator.     

A selected review on the negative externalities of the freight transportation: Modeling and pricing

The planning of freight transportation activities creates benefits as well as costs. Among those costs, some of them, namely externalities, fall on other people/society that have no direct relevance to the operations of transportation. Such externalities are accrued expenses which should be addressed by actual pricing policies to enable an efficient and sustainable freight transportation system. This paper reviews externalities in quantitative terms, and then provides pricing studies of these costs per unit of freight transported along with the most recent estimations. The associated negative externalities are structured by transportation mode (road, rail, maritime, and air).     

Policy in motion: reassembling carbon pricing policy development in the personal transport sector in British Columbia

British Columbia’s carbon tax is an example of a relatively systemic climate pricing policy in the North American transport sector. This research uses Actor-Network Theory to retrace and reassemble the development of the tax from inception to implementation. From the fieldwork, six stages of the policy development process emerged, beginning with the surfacing of the concept of tax shifting in 1998 to the implementation of a carbon tax in 2008. This article explores how British Columbia’s experience aligns with lessons from the carbon taxation literature relating to a range of themes including education, leadership, timing, administration, taxation level, revenue allocation and communication.     

Modelling and evaluation of road pricing in Paris

This article describes the impacts of road pricing in Ile-de-France, a region that includes Paris. The morning peak is studied using METROPOLIS: a dynamic network simulator that treats endogenously travellers' mode, departure time and route-choice decisions. Time-independent tolls on selected links, time-varying cordon tolls, and a network-wide toll proportional to travel time are considered. Welfare gains from the link and cordon tolls are relatively small. The comprehensive travel-time-based toll yields much higher benefits. In all cases, benefits to users amount to a large fraction of toll revenues and exceed the monetised value of reductions in noise, accidents and vehicle emissions.     

Basic economic principles of road pricing: From theory to applications

This paper presents, a non-technical introduction to the economic principles relevant for transport pricing design and analysis. We provide the basic rationale behind pricing of externalities, discuss why simple Pigouvian tax rules that equate charges to marginal external costs are not optimal in ‘second-best’ settings, and discuss the conceptual link between congestion pricing and road capacity. The final part of the paper is devoted to implementation paths for transport pricing policies. A simple numerical model demonstrates how different time patterns of constraints on pricing and capacity policy instruments may lead to different time patterns of efficiency along those implementation paths.     

Office location decisions, modal split and the environment: the ineffectiveness of Norwegian land use policy

An examination of five Norwegian companies’ decisions to locate/relocate reveals that the new locations are in accordance with policy objectives of reduced car commuting and related environmental improvements. Still, most companies ended up with new locations that increase car commuting significantly, compared both to the situation before relocation and to the alternative location that was eliminated only at the last stage in the selection process. This paradox may be explained by a double policy failure: First, current policy instruments are not oriented towards the parameters that companies themselves consider as key selection criteria for office location. Second, policy instruments do not adequately address factors that determine the share of car commuting for a given location.