Policy makers and industry experts repeatedly have called for more flexibility in the provision of air navigation services in order to mitigate persistent delay problems especially in Europe. However, increasing flexibility not only comes at a cost, it might also lead to unexpected and even detrimental results that have not attracted much attention in the literature yet. This paper evaluates the economic impacts of flexibility that is achieved through overtime hours of air traffic controllers (ATCOs). In our model, the air navigation service provider (ANSP) is facing uncertainty in demand and decides on user charges as well as on capacity provision. We compare two scenarios in which the ANSP is either able or unable to use overtime ATCO-hours in a high demand environment. In general, more flexibility in capacity provision increases expected economic welfare only slightly (0.13% in our base case). Moreover, more flexibility only reduces expected en-route delays if the ANSP aims at maximizing welfare (constrained by a zero-profit-regulation). For a profit-maximizing ANSP, more flexibility even increases expected en-route delays. Taking the decisions of airlines and passengers into account, we show that more flexibility also leads to additional (‘induced’) demand, contributing to higher costs of capacity provision. Whereas flexibility in capacity provision reduces delays in a high traffic environment, it increases delays in a low traffic situation, as the ability to increase capacity provision if traffic is high also provides a (strategic) incentive to reduce the number of ATCOs that are controlling the airspace in a low demand environment.

In the context of railway deregulation in the West and East, introducing competition (through open access) to railways can be achieved via different organizational structures. Using game theoretic method, this is the first attempt to model three organizational structures, namely, full separation, holding, and full integration, and to investigate their impacts on air-HSRs competition. Analytically and numerically (based on the Beijing-Shanghai route), for a profit-oriented HSR infrastructure, a holding structure helps HSR to compete most effectively with air, delivering the highest profits for the HSR competitor and the HSR industry. Compared with other structures, a full integration structure produces the highest market share for the HSR incumbent and HSR consumer surplus, resulting in predatory pricing against the HSR competitor. Moreover, integration leads to strong economic incentives for the incumbent to implement limit pricing to dislodge entry. These results provide an elucidation for the puzzle of why railway deregulation in the Chinese market has lagged compared with that in Europe. Further sensitivity analysis shows that the regulation of the access charging regime has an effect on the impact of the organizational structure in which a welfare-oriented regulation should be coupled with a profit-oriented structure such as full separation. In general, each structure has pros and cons, and different authority goals (promote modal shift, increase competition, improve welfare, etc.) and statuses serve as a prerequisite for choosing the optimal structure.

Given the natural monopoly properties and higher levels of connectivity of large airports, workable airport competition may not be possible, requiring regulation. This simple rule becomes more complicated, when looking also at the product range of airports, difference in consumer preferences and their price elasticity or competition from other transportation modes like high-speed rail on short-haul routes, thereby also affecting the catchment area. Control of access to aviation-related services, like ground handling, can also matter. Private versus public ownership of airports complicates the picture, as do airport capacity constraint. Transaction costs and opportunistic behaviour can also lead to regulation. After covering the literature concerning airport regulation, the chapter goes on to look at a number of actual cases involving market power and its regulation. It also looks at airports charging behaviour and price discrimination, depending on the level of congestion at an airport. A number of studies of airport competition and its implications for regulation are summarized, especially for the UK, the Netherlands [Schiphol] and Australia. The studies commissioned by the ACI, which suggest that airports should be just subject to competition law and regulation should be the exception are also discussed.

This chapter contributes to the discussion on the most suitable form of airport regulation by focusing on the impact of airline behavior and the international focus of airports on the choice of regulatory scheme. Different objectives are discussed (welfare maximization, rent control, or efficient production), and the chapter touches upon the question of high- or low-powered regulation as the most suitable method to achieve said objectives. Low-powered airport regulation potentially leaves the rents to airlines, and not necessarily the final consumers. High-powered regulation leaves the rents with the local airport rather than with the international airlines, which may be politically convenient. If airlines are active in competitive markets, low-powered regulation leaves rents to passengers, and if the majority of these passengers is foreign, this scheme may also not be politically feasible.

Regulation on infrastructure pricing affects various aspects, including demand, social welfare, and investment in transport management, as well as intramodal and intermodal competition. This study develops a game theoretic model that derives the charges (set by the infrastructure operators) and fare prices (set by the transport operators) as well as the associated profit and welfare in equilibrium. Key analytical insights concern the joint effect of the product differentiation by the transport operators and profit/welfare orientation of the infrastructure operators. If the transport operator implements more differentiation between air and HSR, or the infrastructure operators are more profit-oriented, the transport mode becomes less sensitive to the access charge from the competing mode, but more sensitive to the access charge from the same mode. Furthermore, using publicly available data for European and Chinese markets, we investigate the effects of introducing HSR on-track competition and congested infrastructures through numerical studies. Key findings are that entry by an incumbent-owned compared to a privately-owned HSR generates more industry benefits but leads to a significant reduction in consumer surplus. A more profit-oriented airport operator leads to increased total welfare if congestion is sufficient high. Theoretical and policy insights are provided.

This paper investigates the impacts of possible measures to enhance HSR market share in the London-Amsterdam market. To this aim, we adopted a two-level aggregate nested logit model able to jointly model trip distribution and trip generation, thus taking into account that the tested policies may increase or decrease the overall demand. The model was applied to an extensive dataset about passenger flows traveling between London airports and HSR station and Amsterdam in the period 2015–2019. The results show that both the reduction of HSR fares and the application of an air ticket tax, albeit with different impacts in terms of stimulus or reduction effect on overall demand, are ineffective in increasing HSR market share, if not adequately supported by improving HSR service. Increasing HSR frequency and reducing HSR travel times constitute the best opportunities to increase HSR ridership by stimulating a higher substitution effect than modifications in relative fares. Lastly, the recent queueing at airports, following staff shortages and strikes, significantly lower air transport demand and potentially has a substantial upward effect on HSR market share.

Regulating infrastructure competition between air transport (air) and high-speed rail (HSR) services is complicated since both profit and welfare should be considered when setting the air congestion toll and rail access charge, also taking the effects of those on travel fares into account. This study develops a game theoretic model that derives the charges (set by the regulators) and fare prices (set by the operators) as well as the associated profit and welfare in equilibrium. Key analytical insights concern the joint effect of the airport congestion toll and the profit/welfare orientation of the HSR regulator. In all circumstances, a higher toll leads to a higher air fare, as expected. If the HSR regulator is sufficiently profit oriented, then it will exploit its improved competitive position by setting a higher rail infrastructure charge, leading indirectly to a higher rail fare and reduced consumer welfare. However, to avoid a (large) welfare reduction, a more welfare oriented HSR regulator may reduce the rail access charge in response to a higher airport congestion toll, so that the rail operator is less inclined to increase the rail fare. Further analytical results also highlight that the airport congestion toll and the profit/welfare orientation of the HSR regulator should not be considered in isolation. We also explore these effects numerically in a case study for the Beijing-Shanghai route.

This paper studies airline network optimality. We modify existing models (Brueckner and Spiller (1991) and Zhang (1996)) to explain airline network optimality, using heterogeneity and different market sizes. Dropping small destinations from a hub-spoke network may increase overall profits and total welfare. But consumer surplus is always higher with a full network. This leads to a policy dilemma: the airline may want to drop smaller destinations, while the local economy benefits from these destinations. The level of substitution hardly has an effect.

This paper reviews the relevant literature to answer the question if hub-spoke networks are optimal from an economic and environmental aspect. Hub-spoke networks are used to serve a large number of destinations with a high frequency. The concentration of flights and demand leads to positive economic effects: additional indirect effects come from the high number of destinations. Airlines may prefer indirect passengers over direct passengers, at the expense of local welfare, if the willingness-to-pay of the former is higher. Furthermore, indirect effects are a redistribution of the direct effect, and may lead to double counting. Empirical evidence on environmental performance is mixed. Some case studies suggest hub-spoke networks are more harmful, given aircraft technologies and load factors. Proposed climate policies increase costs of operations, likely leading to a strengthening of the hub-spoke system. Further research into network development and the effect of climate policy on airline behaviour is necessary to support climate and aviation policy.

The aim of this paper is to calculate landing fees for five uncongested airports in Iran. To this end, a Ramsey pricing model is used, with focus on domestic flights. Marginal costs for different aircraft types, namely Fokker 100, Boeing MD83, and Airbus A320 are estimated. Next, these marginal costs are used to calculate the Ramsey fees for each aircraft type in Iran. The findings of this study indicate that an increase in the length of flight increases the Ramsey landing fees. Moreover, the calculated Ramsey landing fees for the flights with length of 800 km or less are lower than the current weight-based fees; while for the flights with length of 1200 km and more the Ramsey fees are higher than the current fees. The other finding is that the Ramsey fees for A320 is always lower than that of MD83 despite the fact that A320 has a higher maximum takeoff weight than the MD83.

The rapid rise of aviation (including airport infrastructure) has prompted various research and policy questions on its socio-economic impact on spatial development of regions. Since the aviation industry facilitates a worldwide transportation network for business and tourism, it is considered to be a critical factor for economic growth. This study aims to analyze the relationship between air transport and regional development in Turkey, by using air passenger volume and regional employment data by means of both non-spatial and spatial regression methods. We run a Two-Stage Least Squares (2SLS) regression model with instruments to capture endogeneity, and Generalized Spatial Two-Stage Least Squares (GS2SLS) models to control for the spatial context by using data from 81 Turkish NUTS 3 regions (provinces) between 2008 and 2017. We extend the existing literature by measuring spatial spillover effects of air transport on regional growth. To the best of the authors' knowledge, this study is the first attempt to examine this link by considering both spatial effects and endogeneity problems. The results confirm our hypothesis that air transportation is an important determinant of regional employment in Turkish regions while the impact of air transport on regional employment decreases when spatial effects are taken into consideration.

The aim of this study is to examine the effects of public transportation infrastructure investments on regional economic growth in Turkish NUTS 2 regions between 2004 and 2011. To offer an advanced statistical analysis, we employ an augmented production function model for measuring the effects of different types of transportation infrastructure on regional output. We use specifically ordinary least squares (OLS), fixed effects, two-stage least squares (2SLS) and Hausman-Taylor IV estimation methods with both cross-section and panel data. Our results show that road and motorway infrastructure have strongly significant positive effects on regional output in all our estimations. Land infrastructure is found to play a very important role in regional economic performance in Turkey, while, somewhat surprisingly, air infrastructure has no significant impact on regional GVA, which clearly suggests the existence of different types of transportation infrastructure in the Turkish regions. Also, the high growth elasticity of land infrastructure in the Turkish regions indicates that Turkey is currently still suffering from an inadequate transport infrastructure.

The aim of this study is to synthesize the current literature on infrastructure and growth by determining sources of variation in empirical results by means of a meta-analysis. We use an ordered probit model for investigating changes in the probability of finding negative, positive, and insignificant impacts. The total data base consists of 912 observations from 42 studies conducted between 1995 and 2014. The meta-analytical results show that study characteristics do matter for the magnitude and sign of the variables concerned. We find that studies which employ data from the US are more likely to register a negative impact of public infrastructure on regional growth. We also find that type of infrastructure, research methodology, time span, type of infrastructure measure, and geographical scale affect the outcomes of the primary studies. Studies that take into account interregional, interstate and interprovincial relations have a higher chance of finding negative effects, which gives an idea about the spillover effects of these investments. In contrast, some characteristics like output measure and selection of a particular sector appear to have no effect on obtaining positive, negative or insignificant outcomes. The findings of this study offer new insights to policy makers on the variation in empirical results regarding the relationship between public investment infrastructure and regional growth.

We derive the expected user costs of U.S. domestic air travel delay variability taking into account scheduling behavior of travelers. Travelers do not only consider mean arrival delays but also face scheduling costs because they arrive too early or too late at their destination. The model allows travelers to anticipate arrival delay variability by choosing an earlier flight. We show that the expected user costs of U.S. air traffic delays are almost doubled if expected schedule delay of travelers is accounted for, whereas the benefits of improvements in mean delay are underestimated by 16% if arrival delay variability is ignored.

This study uses EUROCONTROL data on operating performance of the national air navigation service providers over the 2002-2011 time period to document in detail the efficiency changes across providers and time using data envelopment analysis. Our results suggest that overall providers' productivity improved over the time period covered by the data, driven by improvements in technical rather than allocative efficiency. However, some trend reversals in the post-2008 crisis period are also observed. (C) 2015 Elsevier Ltd. All rights reserved.

This discussion paper led to an article in the Journal of Advanced Transportation (2014). Volume 48, issue 3, pages 185-202. Data Envelopment Analysis (DEA) has become an established approach for analyzing and comparing efficiency results of corporate organizations or economic agents. It has also found wide application in comparative studies on airport efficiency. The standard DEA approach to comparative airport efficiency analysis has two feeble elements, viz. a methodological and a substantive weakness. The methodological weakness originates from the choice of uniform efficiency improvement assessment, while the substantive weakness in airport efficiency analysis concerns the insufficient attention for short-term and long-term adjustment possibilities in the production inputs determining airport efficiency. The present paper aims to address both flaws by: (i) designing a data-instigated Distance Friction Minimization (DFM) model as a generalization of the standard Banker-Charnes-Cooper (BCC) model with a view to the development of a more appropriate efficiency improvement projection model in the BCC version of DEA; (ii) including as factor inputs also lumpy or rigid factors that are characterized by short-term indivisibility or inertia (and hence not suitable for short-run flexible adjustment in new efficiency stages), as is the case for runways of airports. This so-called fixed factor (FF) case will be included in the DFM submodel of DEA. This extended DEA – with a DFM and an FF component – will be applied to a comparative performance analysis of several major airports in Europe. Finally, our comparative study on airport efficiency analysis will be extended by incorporating also the added value of the presence of shopping facilities at airports for their relative economic performance.

This paper studies the relationship between reliability (proxied by punctuality) and productivity in passenger railroad services. Increasing reliability may lower productivity, as it requires inputs, that can't be used to produce outputs. The relationship between reliability and productivity also runs through other factors, in which case a positive relationship may be expected. We apply data envelopment analysis and the Malmquist index approach to a panel of seven European railway systems to explore this relationship. Our empirical results suggest that increasing reliability does not harm the productivity of railway operations and aiming to improve both may be a feasible strategy. (C) 2013 Elsevier Ltd. All rights reserved.