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.     

A comparative efficiency analysis of Spanish and Turkish airports

AENA in Spain and DHMI in Turkey operate a large majority of the airports in their respective countries. These two airport operators share some similar characteristics, but also present many differences with respect to their management strategies. For instance, the Turkish DHMI introduced a Build-Operate-Transfer (BOT) model and concession agreements, which enables active private participation in airport management. In contrast, management and operation responsibilities at all airports in Spain –with a few exceptions-have remained with AENA. This paper utilizes a data envelopment analysis (DEA) to compare the relative efficiency of airports within AENA and DHMI for the years between 2009 and 2011. Based on the efficiency scores, it further identifies the sources of inefficiencies resulting from various management strategies and other external factors. The results indicate higher average efficiency levels at Spanish airports, but private involvement enhances efficiency at Turkish airports. The majority of the airports in Spain and Turkey operate under increasing returns to scale. Certain policy options, including a higher private involvement and improvement of the airport network by closing some inefficient airports, should be considered in order to increase the airport efficiency in both countries.     

Spanish airports performance and efficiency benchmark. A PESA-AGB study

This study uses a MCDA tool to analyse and improve Spanish airports performance and efficiency. Thus, a holistic study using MACBETH (with PESA-AGB) is used. This study has never been applied before in Spanish airports. Firstly, a literature review related to this study keywords is conducted, as well as about benchmarking concept applied specifically to airports. Secondly, several methodologies in used to benchmark airports are reviewed and compared. Thirdly, airport performance and efficiency issues are addressed and described. Finally, the MCDA-MACBETH (with PESA-AGB) tool is applied to 4 Spanish airports.Spanish airports belonging to AENA transported 263, 753, 406 passengers in 2018 with an increase compared to 2017 of 5.8%. General data enables to conclude that.Spanish air transportation system is growing annually and hence there is the need to improve airports performance and efficiency, also to maintain the high levels of quality to address the growing demand. Spanish air transportation system is growing annually and is it upmost important to maintain high levels of quality to address such demand. Through this study, performance and efficiency improvements are seek within several airport key areas such as Safety and Security, Quality Service, Productivity and Effectiveness, Financial and Environment.     

Substitution and complementarity in aviation: airports vs airlines

In this paper a model concerning substitution and complementarity on the linkage between airport facilities and airlines from the viewpoint of pricing policy is formulated. This model is used to analyze whether airport pricing policies, e.g. to ensure cost recovery, are compatible with competition for transfer passengers. It is found that airports with a high volume of demand can pursue cost recovery and still be the most preferred hub. Airports with a low level of demand will not be the preferred hub, even if the larger airport charges higher taxes to recover costs.     

Predicting multi-faceted activity-travel adjustment strategies in response to possible congestion pricing scenarios using an Internet-based stated adaptation experiment

This paper reports the estimation of several discrete choice models describing reactions of individuals to congestion pricing scenarios. The models were estimated on data obtained in a stated adaptation experiment that was administered through the Internet and designed to examine how individuals adjust their activity-travel patterns. An activity-based approach is used meaning that all choice facets of activity patterns are taken into account as well as a complete set of activities. Estimates of price elasticities of travel demand are in line with other findings reported in the literature. Results of the stated adaptation experiment suggest that changing route or departure time is the most important way of adapting work trips, whereas public transport and working at home play a more limited role. For non-work activities changing route and switching to bike are the dominant responses.     

Accounting for size in efficiency comparisons of airports

This paper adopts the metafrontier model to analyze and compare the technical efficiency of small and large UK airports. The interesting feature of the model is that it takes into account the technological differences in the estimation of efficiency, and thus increases the accuracy in the efficiency comparison between heterogeneous airports. Results show that large airports are generally more technically efficient and have less operational wastage than small airports. Along with size, factors such as location, technological access, and capital investments could contribute to the efficiency difference between small and large airports.     

Airport Services and Airport Charging Systems: A Critical Review of The EU Common Framework

This paper reviews proposals contained in the Commission of the European Communities (CEC) Consultation Paper of 1995 and Draft Directive of 1997 on Airport Charges. Economic and practical problems associated with the CEC proposals are highlighted. The main conclusions are that the CEC proposals will be difficult to enforce because they are vague, implementation is left to the individual member states, and because they allow for a variety of approaches to charging systems which can include substantial cross-subsidisation across aeronautical and non-aeronautical uses at one or more airports. The fact that the Commission will not have significant powers of enforcement further reduces the impact which the proposals can have.     

Efficiencies and scope economies of Chinese airports in moving passengers and cargo

The paper looks at the technical efficiency of Chinese airports using multi-output stochastic input distance function analysis. This method provides a statistical test of scope economies to investigate the contribution of air cargo transport to airport efficiency. Our findings confirm the presence of scope economies in air passenger and air cargo transport among airports in China. We compare and contrast these results with results obtained from single-output stochastic production frontier analysis in which the effect of scope economies is not included. Our results indicate that the presence of scope economies significantly affects the estimation of technical efficiency, thus implying different efficiency rankings among airports in China.     

Local authority and academic attitudes to urban road pricing: a UK perspective

Urban road pricing as an instrument of traffic management has generated a great deal of interest in the UK in recent years. Whilst this is the case there is still no urban road pricing scheme in operation in the UK. The reason for this is primarily one of ‘acceptability.’ This paper, through the use of a national survey, examines the attitudes of key stakeholder groups with respect to urban road pricing. How serious is traffic congestion and traffic related pollution perceived to be by Local Authority Councillors, Officials and the Academic community in the UK? How is urban road pricing viewed by this sub-group of the population in terms of its effectiveness and public acceptance when compared to other policy options? and how could the saleability of urban road pricing be improved? This raises issues in terms of how the revenue raised from urban road pricing should be utilised, the use of urban road pricing as part of a package of measures, the concerns expressed by the stakeholders with respect to urban road pricing, such as the invasion of road users’ privacy, and the type of technology which should be considered. Overall, the paper aims to further the debate among policy makers.     

The pricing responses of non-bag fee airlines to the use of bag fees in the US air travel market

Using a panel data for Southwest and JetBlue in the 1st quarter of 2009, 2011, and 2013, we develop an empirical study and find evidence suggesting that the amount of bag fee charged by bag fee airlines, including those direct rivals at the route level and indirect rivals competing from adjacent airports, has a positive and significant effect on the airfare of non-bag fee airlines and such a positive association is smaller on vacation-oriented routes, but greater on routes with higher per capita income at endpoint cities. Moreover, the results are found that on the routes where Southwest is the only non-bag fee airline, the amount of bag fee charged by other airlines has a positive and significant effect on the traffic volume of Southwest. This traffic increasing effect, however, may be offset by the higher airfare of Southwest in response to other airlines’ imposition of bag fees.     

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.     

Public bike system pricing and usage in Taipei

Although widely implemented, public bike systems (PBSs) are facing a conflict between system usage and sustainable financing. The relationships between PBS pricing and usage must be clarified to formulate solutions for the conflict. This research used the Taipei PBS, YouBike, as a case study. A stated preference survey was conducted on metro passengers, and a binary logit model was applied to analyze the pricing effects of PBS on passengers’ choice of using PBS as their transfer mode. A latent class model was also used to identify segment-specific preferences. The empirical data show that whether commuters used PBS as a transfer mode was highly dependent on the basic fee and basic period, but not on the variable fee after the basic period; the basic fee mattered to a commuter's choice more than the basic period; irregular PBS users were more sensitive to the basic fee than regular PBS users; and regular PBS users were more sensitive to the basic period than irregular PBS users. The current results broaden the understanding of how PBS pricing affects its usage and illustrate a pricing policy analysis for YouBike that considers sustainable financing and system usage.     

Differential pricing strategies of air freight transport carriers in the spot market

The single pricing approach fails to reflect different demand changes in response to its cargo space prices at different sales periods. This might be an obstacle to maximize the cargo space revenue of air freight carriers. This paper conducts the empirical analysis on pricing strategies in the spot market for two competitive air freight transport carriers operating on the same segment. It concludes that two carriers gain more revenues with the optimized differential pricing approach than with the single pricing approach. In theory, the research enriches the current literature in terms of pricing strategy optimization under the competition of two parties. In practice, it provides references for air freight transport carriers in their decision-making of applying the differential pricing strategy.     

Airport partial and full privatization in a multi-airport region: Focus on pricing and capacity

This paper studies the capacity and pricing choice of two congestible airports in a multi-airport metropolitan region, under transition from a pure public, centralized airport system to partial or full privatization. We develop analytical models to investigate three privatization scenarios: public–private duopoly, private–private duopoly, and private monopoly. We find that, airports follow the same capacity investment rule as prior to privatization when capacity and pricing decisions are made simultaneously. Pricing rule after privatization becomes more complicated, with additional factors having an upward effect on the privatized airport(s) and a downward effect on the remaining public airport.     

Maximizing the value for money of PPP arrangements through flexibility: An application to airports

The economic crisis in most developed countries is fostering the search for new models for infrastructure planning and management. There is great uncertainty surrounding these investments and, therefore, it is necessary to capture the latent value from infrastructure projects. The principle is that the project should have the necessary flexibility to adapt to future changes, i.e., at the design stage it is necessary to incorporate flexible options that would allow the infrastructure and/or the service to be adapted to changes.This paper focuses on contextualizing this concept as well as characterizing real options and identifying different areas of application to showcase the broad range of the different fields that make use of this tool. Moreover, the case study which regards a large infrastructure – an airport – will allow quantifying the economic value of some options supported in real options theory.     

Municipal solid waste management and greenhouse gas emissions at international airports: A case study of Astana International Airport

The steady expansion of the city of Astana and the increase of airport capacity is leading to an increase in municipal solid waste generation. The purpose of this study was to perform compositional analysis of the municipal solid waste produced at the Astana International Airport and evaluate different waste management scenarios in terms of greenhouse gas emissions. Recyclable and combustible fractions were found to be the major fractions (over 50%) of the total municipal solid waste generated in the Astana International Airport. Four base greenhouse gas emissions scenarios were proposed in this study, namely scenario-1 describing the current municipal solid waste management case, scenario-2 with integration of 29% recycling and 71% of municipal solid waste landfilling, scenario-3 for 100% of airport municipal solid waste being incinerated and scenario-4 for recycling 29% and the remaining waste being processed for energy recovery purposes. The proposed scenario 2 demonstrated significantly reduced net greenhouse gas emissions (t CO₂ eq/year) over the existing scenario 1, while scenarios 3 and 4 showed negative net greenhouse gas emissions. The experimental data provided and the scenarios discussed in this work are useful tools for decision makers for environmental waste management at airports.     

The airfare pricing and seat allocation problem in full-service carriers and subsidiary low-cost carriers

This study investigates the competitive market situation in the air transport industry considering full-service carriers (FSC), subsidiary low-cost carriers (LCC) and rival LCCs on the flight-leg level while subsidiary LCCs are established by FSCs against rival LCCs to keep the market share and to make more profit. It is assumed that the demand of economy class for each airline follows a known distribution, and the mean value of that distribution is a function of its airfare and the airfare differences with other airlines. In addition, no-shows and cancellations are introduced to reflect a real situation. Based on this situation, a mathematical model is developed to derive efficient airfare pricing and seat allocation for each airline for maximizing the profit sum of both FSCs and subsidiary LCCs using a repeated game. A repeated game model integrated with a Tabu search algorithm and an EMSR based heuristic is suggested to deal with the proposed repeated game. A numerical example is provided to validate the model and solution procedure with hypothetical system parameter values under two kinds of market situations that show before and after the emergence of subsidiary LCCs.     

Impact of transport pricing on quality of life, acceptability, and intentions to reduce car use: An exploratory study in five European countries

This paper examines how a transport pricing policy aimed to reduce car use may affect individuals’ Quality of Life (QoL), to what extent this policy is acceptable to the public and if people intend to change car use when the policy is implemented. Also, comparisons were made amongst five countries (Austria, Czech Republic, Italy, The Netherlands and Sweden). An internet survey among 490 respondents showed that a stringent measure, i.e., doubling costs of car use, hardly affects people’s general QoL. Respondents are unsure whether they would accept the policy and whether they intend to change their car use if the policy is implemented. Respondents from The Netherlands and Sweden are more pessimistic about the QoL consequences of the policy, think the policy is less acceptable and are less inclined to reduce car use than respondents from the Czech Republic, Italy and, to a lesser degree, Austria. Implications and recommendations for developing, adjusting or supplementing QoL measurement instruments and policies are discussed to ensure effective and efficient policy making.     

Airport Services and Airport Charging Systems: A Critical Review of The EU Common Framework

This paper reviews proposals contained in the Commission of the European Communities (CEC) Consultation Paper of 1995 and Draft Directive of 1997 on Airport Charges. Economic and practical problems associated with the CEC proposals are highlighted. The main conclusions are that the CEC proposals will be difficult to enforce because they are vague, implementation is left to the individual member states, and because they allow for a variety of approaches to charging systems which can include substantial cross-subsidisation across aeronautical and non-aeronautical uses at one or more airports. The fact that the Commission will not have significant powers of enforcement further reduces the impact which the proposals can have.