The impact of aircraft noise and air pollution on scale economies of UK airports

1
Introduction
The impact of aircraft noise and air pollution on
scale economies of UK airports
externalities scale economies UK airports

• Modelling and simulation
• Monetary esimates from previous literature

Augusto Voltes-Dorta Department of Economic
Policy Universitat de Barcelona avoltes_at_becarios.u
lpgc.es
Chikage Miyoshi Department of Air
Transport Cranfield University c.miyoshi_at_cranfield
.ac.uk
2
1. Air Pollution and CO2
NOx
SOx
HC
CO2
Monetary value (price per metric ton)
70 t/C in 2000 prices (UK Gov.)
4.2 - 36 in 1999 prices (ExternE, 1999)
7.2 - 54 in 1999 prices (ExternE, 1999)
4.7 - 26 in 1999 prices (ExternE, 1999)
Emission Factors (ICAO Air Quality Manual)
Aircraft movements data (OAG)
Emission Costs
3
1. Noise
Monetary value (WTP per dB reduced)
Noise Contours and Population Counts

• Aircraft movement data
• Day/Night split
• Runway modal split
• Departure/arrival tracks
• Coordinates, elevation, etc

4
2. Social Cost Function
Cost Function Specification
Noise
Modelling and simulation
Avg cost per km2 of noise contour
Emissions
Price per ton of CO2-eq
Capital
UK Airport Statistics Univ. of Bath
Capital cost per m2 of terminal
Materials
Materials cost per check-in desk
Passengers
Commercial revenues
ATMs
Cargo
X
X
Labor
Labor cost per FTE
Social Costs
5 Input prices
16 valuation scenarios
2 outputs
5
2. Data and Methodology
UK Airport Database
Stochastic Frontier Analysis

• 27 UK airports
• Quasi-balanced panel 1994-2009
• 381 observations

Bayesian Inference
6
3. Scale elasticities and MES
Average Airport 2 million annual passengers
7
3. Individual airports

• Scale elasticities decrease with airport size

• Only Heathrow falls into diseconomies of scale

• Full-service operations appear to reduce
  airports MES

• Low-Cost operations increase airports MES

• Externalities reduce airports MES between 10-50

• Most airports still enjoy social scale economies

8
4. Recap

• Impact of externalities on scale economies of UK
  Airports.
• A Social Cost Function is estimated
• Previous literature is used to monetize Noise
  and Air Pollution.
• LCCs appear to increase returns to scale in
  airport operations.
• Airports MES drop 10-50 when externalities are
  included.
• UK Airports, except Heathrow, enjoy Social IRS.
• Contribution to debate on UK Aviation policy

9
Thank you