Regional aviation and economic growth: cointegration and causality analysis in Australia

Air transport is a critical link to regional, rural and remote communities in Australia. Air services provide important economic and social benefits but very little research has been done on assessing the value of regional aviation. This research provides the first empirical evidence that there is short and long run causality between regional aviation and economic growth. The authors analysed 88 regional airports in Australia over a period of 1985–86 to 2010–11 to determine the catalytic impacts of regional air transport on regional economic growth. The analysis was conducted using annual data related to total airport passenger movements – for the level of airport activity, and real aggregate taxable income – to represent economic growth. A significant bi-directional relationship was established: airports have an impact on regional economic growth and the economy directly impacts regional air transport. The economic significance of regional air transport confirms the importance of the airport as infrastructure for regional councils and the need for them to maintain and develop local airports. Funding should be targeted at airports directly to support regional development.     

Emissions trading for international aviation—an estimation of the economic impact on selected European airlines

International aviation is responsible for between 2.5% and 3% of anthropogenic carbon dioxide (CO₂) emissions that are partly held responsible for climate change. International aviation is not subject to any regulatory framework for the limitation of these emissions. From an economic point of view, the introduction of an emissions trading scheme would be an appropriate instrument to limit these emissions. This paper outlines the possibilities on how aviation could be included in existing emissions trading schemes and gives an overview on the current political discussion. It continues with an empirical estimation of the impacts on operating costs and transport demand for low cost, full service, holiday and regional airlines taking Ryanair, Lufthansa, Condor and Air Dolomiti as examples, under three different design options for an emissions trading scheme. Finally, conclusions about the impacts on intra-European and worldwide airline competition are drawn.     

The role of regional airports and air services in the United Kingdom

This paper deals with the implications of the 1998 UK transport White Paper for regional airports and air services within the wider context of the promotion of an integrated and sustainable transport system. More specifically, the discussion initially addresses the political and business context of the development of air transport in the UK regions. Secondly, the recent trends defining that development are isolated, particular attention being paid to the increasing importance of supplier-led strategies in air transport and the segmented markets served by regional airports. Finally, the three, not easily reconciled, strands, which can be identified in the White Paper’s analysis of aviation are considered. These are: air transport's relationship with sustainable development; the integration of air transport with surface modes; and the contribution of air transport to regional economic growth.     

Comparison of major air freight network hubs in the U.S. and China

The increase in global economic connectivity spurred by ties between Chinese manufacturing and a global market, particularly in high value low weight goods, pushed establishment of air cargo networks. These remain under-examined but impactful particularly for second and third tier metropolitan hub cities. This research looks at the air freight connections within China, a major rapidly developing trade center, and use of the aerotropolis concept to accelerate growth in the lagging inland region. References are made to FedEx and UPS networks within their U.S. headquarter region and in China to note differences in political economic contexts and China’s adaptation of developed world models. The theoretical framework includes global production networks strategically coupled by transport logistics linked to aerotropolis type development. Data comes from government aviation and transportation sources, research analyses, corporate and industry reports, and interviews with Chinese officials. Focus falls particularly on Zhengzhou, capital of Henan Province in central China and the country’s first airport-centered economic zone. The conclusion finds that Chinese hub cities more closely correspond to major manufacturing and population centers and central policy directives for development dispersion.     

Air transport demand and economic development in sub-Saharan Africa: Direction of causality

Air transport may be a key tool to advance economic development. However, it is uncertain whether air transport boosts economic development, or vice versa. Both views have theoretical and empirical support. In some countries and regions, air transport is important for initiating development, for example by attracting foreign direct investment or granting access to lifelines. Elsewhere, economic development drives air transport demand. Establishing the direction of causality for regions/countries segmented by income level may inform pragmatic policy. This study analyzes the causal relationship between air transport demand and economic development for six sub-Saharan African countries for the period 1981–2018. Vector error correction and vector autoregression models are employed to identify long- and short-run causalities. The results reveal heterogeneous, context-specific causal relationships. In the long-run, for South Africa, Nigeria and Kenya, the direction of causality runs from economic development to air transport demand; for Ethiopia, causality runs in the opposite direction, with increased demand for air transport promoting economic development; and for Senegal and Angola, the relationship is too weak to infer causal directions. Possible explanations for this heterogeneity include differences in per capita income, low-cost carriers' share of national aviation markets, the presence of large home-based airlines, and comparative geographical advantage as a natural hub.     

The broader economic consequences of transport infrastructure investments

A major question in Economic Geography relates to the scale and nature of transport infrastructure’s contribution to the broader economy. While Cost-Benefit Analysis (CBA) is the most widely used of the three potential approaches, the recent interest in the wider economic benefits of transport infrastructure has spawned a variety of macroeconomic models. However, the estimates of magnitudes and direction of economic impacts of infrastructure by various macroeconomic models are sharply different, and these models shed little light on causal mechanisms linking transport and the economy. This paper has two aims: first, to highlight the wider economic benefits of transport infrastructure from the observed role of railroads and waterways in economic development, and two by reviewing recent theoretical developments to identify the multiple causal mechanisms which link transport and economic growth such as : market expansion, gains from trade, technological shifts, processes of spatial agglomeration and processes of innovation and commercialization of new knowledge in urban clusters (made possible by transport improvements). Hence the need for developing general equilibrium analyses of transport-economy linkages.     

Risks,resilience, and pathways to sustainable aviation: A COVID-19 perspective

This paper discusses the COVID-19 pandemic as an opportunity to reconsider the foundations of the global aviation system. There is much evidence that air transport creates opportunities as well as risks. While the former accrue to businesses and individuals, risks are imposed on society. Pandemics, in which aviation has a role as a vector of pathogen distribution, as well as the sector's contribution to climate change are examples of long-standing negative externalities that continue to be ignored in assessments of aviation's economic performance and societal importance. As commercial aviation has shown limited economic resilience throughout its history, this short paper questions whether a return to business-as-usual, supported by very significant State aid payments, is desirable. The volume growth model championed by industry and aviation proponents may have to be replaced with an alternative model of a slimmed air transport system that is economically less vulnerable and accounting for its environmental impacts.     

Theorising informality and social embeddedness for the study of informal transport. Lessons from the marshrutka mobility phenomenon

This paper builds upon recent post-structuralist writings on informal economic practices, using most importantly a Polanyian institutionalist framework, to discuss formal/informal and market/non-market practices in the transport sector. The article proposes a critical reading of the literary canon of informal transport, which largely assumes a naturalness and omnipresence of markets. We illustrate how reductionist definitions of informal transport marginalise analytically important empirical detail, and furthermore, lead to misleading theoretical conclusions. In contrast, we analytically de-couple informality and markets, showing that formal and informal economic practices can be embedded in diverse social-cultural institutions. Such a theoretical framework allows for consistent evaluation and empirical examination of transport options, as substantiated by evidence from the marshrutka mobility phenomenon in Bishkek and Tbilisi. We observe marketisation, dis- or re-embedding, formalisation and informalisation as dynamic, inter-dependent and conflictual processes. On these grounds, the article argues for a critical re-appraisal of other forms of informal transport, old and emerging, both in the Global South and the Global North.     

The role of turboprops in China’s growing aviation system

The Chinese aviation system is in a period of rapid growth, with significant growth in second tier and emerging cities. Lower density cities could be well served by regional aircraft, either regional jets or turboprops, which offer different qualities and a different future for Chinese aviation. Turboprops offer a high level of fuel efficiency compared with regional jets which may improve the cost economics for carriers and reduce the air quality and climate impacts of a growing aviation system in a region where air quality and greenhouse gas emissions are a serious concern. However, regional jets are known for their superior quality of service and faster travel speeds. We begin with a spatial analysis of existing Chinese short-haul aviation networks and find that turboprops are deployed in limited number and are dispersed throughout the country. Their limited use, however, is not because of their cost economics. For the existing regional jet network we estimate the trade space of fuel and time for the replacement of regional jets with turboprops and find that all regional jet routes in China would generate savings if replaced with turboprops. We next establish future short-haul aviation routes between new and emerging airports and estimate the likelihood that a turboprop will be used. The finding that the most viable turboprop markets are spatially dispersed through the country validates considering turboprop investment at the state-level as a component of the established Chinese aviation sustainability initiative.     

Twenty years of accessibility improvements. The case of the Spanish motorway building programme

This paper presents an exploratory spatial data analysis of accessibility impacts of a large-scale national motorway building programme. Accessibility is calculated for Spanish municipalities from 1980 to 2000 using two indicators: motorway network access and market potential accessibility. The average distance from municipalities to their nearest motorway has been reduced markedly over this period. Market potential accessibility maps show that there have been gains in all locations, but some of the highest gains occurred in some of the more peripheral regions. A review of the theoretical and empirical literature on the economic impacts of transport investments indicates important implications for regional development.     

The impact of emigrants’ homeland relations on air travel demand in a security volatile market: a case study on Lebanon

The impacts of international migration have been heavily studied. Much of this analysis has been carried out within the framework of the economic and social effects of migrants, to both host and home countries. This paper looks at the impact of Lebanese emigrants’ homeland relations on air travel demand in a security volatile market. The emphasis is on two particular features: first, the principal impact of liberal air transport policies in facilitating emigrants’ home visits; and second, the sensitivity of passenger-GDP relation. The paper pulls together data and other cases on the Lebanese emigration evolution and explains its impacts on the economy as well as on the air transport market in Lebanon. The study findings suggest that in Lebanon and due to the presence of interrelated factors, the variation and the strength of the relationship between traffic levels and GDP are neither consistent nor static. The considerably huge expatriate communities, which are three times greater than the Lebanese residents, are said to defy the negative impact of security instability on the air passenger growth through frequently visiting expats. Moreover, the emigrants’ economic support to Lebanon through remittance inflows is observed to dampen the sensitivity of the relationship between passenger and GDP in times of war and peace. The results should be looked at as indicative of trends to encourage policy makers to consider how best to make use of these human and financial flows.     

Drivers and barriers to the adoption and diffusion of Sustainable Jet Fuel (SJF) in the U.S. Pacific Northwest

Sustainable Jet Fuel (SJF) represents an important component of the airline industry's strategy to simultaneously reduce GHG emissions while meeting a growing demand for international air travel. SJFs also have the potential to provide fuel supply diversification and security, enhance fuel price stability and provide regional/rural economic development benefits. This paper measures and ranks perceived drivers and barriers to an economically viable SJF industry in a unique U.S. region, the U.S. Pacific Northwest (PNW), through personal interviews with key aviation fuel supply chain stakeholders conducted from June to September 2015. In addition to providing a fertile arena for this first effort to systematically assess these drivers and barriers, the U.S. PNW is unique due to the region's long strategic focus on aviation innovation and its importance to the regional economy, the seminal efforts in the region to outline a path forward on SJF beginning in 2010, and the relatively small population spread over a large geographic area with a limited number of “hub” airport nodes which geographically concentrates aviation fuel demand and distribution. Nineteen stakeholder interviewees acknowledge that, in order for regional SJF adoption-diffusion to occur, airline jet fuel buyers must drive the process, particularly as they deal with greenhouse gas (GHG) emission issues and related policy considerations. Important perceived barriers to SJF industry scale-up in the U.S. PNW include the high production costs of SJF and related issues, such as fuel logistics and quality control in the transport, storage, and blending of SJFs. Perceptions around chain-of-custody issues, such as blending, tracking, and crediting of SJFs and future SJF market share projections for the year 2030 were also examined. Incorporating stakeholder input into discussions about adding blended SJF into the U.S. aviation fuel supply provides needed insight for the biofuels industry, policymakers, and researchers.     

Modeling the flight departure delay using survival analysis in South Korea

The air transportation industry in South Korea has been growing since the 2000s. Although the number of air passengers has continuously increased, the flight delay rate has fluctuated from year to year. In this study, a survival analysis was conducted to compare each flight delay in terms of airport/time slot and to evaluate the actual impacts of major variables on flight delays. We performed multiple analyses using survival analysis methodologies, including the Kaplan–Meier estimator, log-rank test, and Cox proportional hazards model. In particular, we applied a turnaround buffer as a key variable in Cox proportional hazards model analysis. The survival curve showed that more international flights departed earlier than scheduled or with minimal delay than domestic flights. However, international flights tended to have more long-term delays. The log-rank test indicated that international flights had a wider distribution of delay times than domestic flights. In the Cox proportional hazards analysis, under the condition in which the actual flight turnaround time was less than 120 min, the results indicated that the longer the actual turnaround buffer was, the less frequently the delays occurred. By using these analyses, we could numerically verify the actual delay trends in South Korea. The results can be used as fundamental resources for political and economic decision-making processes in the aviation industry.     

Including aviation in the European emissions trading scheme: Impacts on the industry,CO2 emissions and macroeconomic activity in the EU

In July 2008, motivated by the expected high growth of aviation and the related impacts on climate change, the European Parliament adopted a directive to include airlines in the European Emissions Trading Scheme. This paper discusses possible impacts of this inclusion on the aviation industry in terms of CO₂ emissions and the macroeconomic activity in the EU. The analysis uses the Energy–Environment–Economy Model for Europe, a dynamic simulation model to investigate impacts of the European Emissions Trading Scheme on air transport. The impacts on air transport output and the macroeconomic effects are estimated to be small. This was robust to varying the carbon price. However, air transport CO₂ emissions were expected to decrease by up to 7.4%, which is more than that estimated previously and stems mainly from the supply-side reaction of the industry.     

Earthquake-induced transportation disruption and economic performance: The experience of Christchurch,New Zealand

The 2010–2011 Christchurch (Canterbury) Earthquakes in New Zealand caused considerable harm, damage and disruption to the lives and livelihoods of residents. Our study examines the role earthquake-related failures in the transportation network played in post-earthquake economic performance, including during the immediate recovery phase. We use detailed (neighbourhood-level) spatial data on both transportation disruptions and economic activity, and how they have spatially and temporally varied across the city in the years prior to and following the earthquakes. We find that the impacts of transportation breakdowns on economic activity was observable and significant and has likely gone beyond areas that experienced direct damage due to the network nature of transport and the locational nature of business.     

End-of-life aircraft treatment in the context of sustainable development,lean management,and global business

Dealing with retired aircraft taking into account the environmental, social, and economic impacts is emerging as an air transportation problem for the near future. The players involved in the problem wish to solve this challenge in a systematic way to benefit from the value extracted from the core activities of the end-of-life (EoL) aircraft treatment, decrease the environmental impacts, and at the same time maximize the social value. This paper proposes a holistic approach to EoL aircraft treatment considering lean management, sustainable development, and the global business environment. An integrated optimization framework is proposed to support decision-making at both the strategic and managerial levels. The flexibility of the framework makes it possible to compare different business models, dismantling strategies, and network structures that impact the efficiency, stability, and leanness of the recovery network. A solution methodology based on the joint application of fuzzy interactive approach and genetic algorithm is introduced. The application perspective and guidelines for pilot study are also provided. To the best of our knowledge, this is the first time that recovery of EoL aircraft is considered based on three aspects of sustainability, lean, and global business. Therefore, this study provides many promising perspectives in this context to enrich the literature of EoL aircraft as a new aviation industry challenge and opportunity.     

Greenhouse gas emissions from flying can offset the gain from reduced driving in dense urban areas

Numerous studies have illustrated how denser urban forms lead to smaller greenhouse gas (GHG) emissions from passenger transport. Many of these studies have excluded aviation since the association between urban structure and air travel is not as intuitive as it is the case of ground travel. However, several recent studies have concluded that air travel is a significant contributor to the GHGs from passenger transport. Furthermore, even air travel habits depend heavily on lifestyles and socio-economic factors that are related to the urban form. Here we analyse the interactions between urban structure and different transportation modes and their GHG impacts in Finland. The study utilises the data from the Finnish Transportation Agency’s passenger traffic survey from May 2010 to May 2011, which includes over 12 000 people and over 35 000 trips. The survey is based on one-day travel diaries and also includes additional data on long-distance trips from a longer period. Methodologically, the study takes a traveller’s perspective to assess the GHG emissions from passenger transport. We found that (1) air travel breaks the pattern where GHG emissions decrease with increasing density of urban structures, and (2) in the metropolitan region there is a clear trade-off between car-ownership and air travel in the middle income class. The main policy implication of our study is that air travel must be included in GHG assessments and mitigation strategies targeting travel behaviour. In dense urban regions, the emissions of air travel have the potential to offset the gain from reduced private driving.     

Unintended trajectories: liberalization and the geographies of private business flight

The global commercial aviation industry has undergone significant regulatory reform during the last 30 years. This paper explores something of the relationship between air transport liberalization and the growth of private business aviation and suggests that the sector’s development is largely an unintended consequence of the increasingly deregulated operating environment in that it has developed to overcome some of liberalization’s negative impacts, including delays, congestion, and perceptions of poor customer service. We argue that liberalization has created innovative market opportunities for private business aviation and illustrate how the sector’s operating models are facilitating new, as yet largely undocumented, forms of aerial mobility. The paper examines: the advantages of private business aviation over scheduled services; business strategies in the sector, especially the idea of fractional jets; the impact of new technologies, particularly the Very Light Jet (VLJ); and, finally, employs Europe as an example of the spatialities of private business aviation.     

Government support to airlines in the aftermath of the COVID-19 pandemic

This paper assesses government support measures to the air transport sector following the outbreak of the coronavirus disease (COVID-19) pandemic from two points of view. First, it explores the factors that shape governments’ willingness to support airlines. This is followed by a discussion on the various types of support that may be provided and how country-specific parameters influence the choice of measures. Second, it analyses the implications of government support in three dimensions relevant to air transport policy: competition and liberalisation, airline ownership and control, and environmental sustainability. The analysis suggests that most governments give a high priority to maintaining air transport connectivity in order to protect economic activity and jobs, in aviation itself and in related sectors such as tourism. The trade-off between ensuring connectivity and maintaining competition after the COVID-19 pandemic is a challenge with several political and economic dimensions. The re-orientation of public policy in the aftermath of the pandemic may limit the relative importance of the policy priorities that shaped the evolution of the air transport sector before the crisis, especially those related to climate change and the environment. The role of government and public authorities at all levels – especially the type and duration of measures affecting transport operations – will be crucial for the future development of the aviation industry.     

Do the regional growth effects of air transport differ among airports?

This paper empirically studies the contribution of air transport to regional economic development in Germany. We find that the scale and direction of output effects of air services and airport infrastructure differ among airports. These differences are driven by ‘opportunity costs’ of airport capital and by positive output effects from air transport connectivity. We argue that the latter impacts potentially depend on traffic characteristics.