Millennium Aviation (M/A) Institute of eAviation Revenue Innovation
Balancing Economic and Environmental Regulation in the Face of Future Growth in Air Transport, New Aircraft Technologies, and the Impact on Airline and Airport Economics
We are involved in research by combining are academic work and contribution with practical air transport and airline management experience. One such example in 2021 can be found below.
Balancing Economic and Environmental Regulation in the Face of Future Growth in Air Transport, New Aircraft Technologies, and the Impact on Airline and Airport Economics.
Prior to the Covid-19 pandemic, the airline industry witnessed record growth in passenger numbers. Given the relative ease in entering markets through deregulated markets, coupled with aggressive revenue management techniques, both low-cost as well as network carriers propel growth through their hubs. Countries with relatively small home markets benefit from attracting traffic from outside their country in order to create density required for longer-haul markets operated by larger-capacity aircraft. Making connecting flights more attractive than originating traffic, longer distances are priced at levels that are in opposite direction to their environmental contribution. This has created negative externalities, most visibly in CO2 emissions but also in noise complaints. Economic growth and environmental protection are to a large extent now on polar opposites.
With population growth world-wide guaranteed, government need options in order to strike a balance between economic growth and the environmental impact. Economic and other air service-related measures are at their disposal to influence the air transport market. Citizens and wider populations are increasingly vocal about the need to do so.
The aim of the project is to present a policy brief by facilitating a deep understanding of the interrelationships and impact on air transportation movements, airport and airline economics resulting from regulatory change that would discourage peaks and detouring (6 th freedom traffic) to curb emissions. It will further assess the impact on consumer choice and positive externalities such as noise reduction.
The initial scope involves one country, possibly The Netherlands. However, given the Netherlands’ position in the EU’s Internal Market for Aviation (1992), this can be extended. Implications on effort of this wider scope would have to be estimated.
The methodology will entail (1) literature review, (2) primary research including conducting interviews, (3) network analysis aided by network planning software.
Expected Outcomes, Significance, Outcomes
The research and policy brief will provide a concise summary of information that can help regulators understand, and likely make decisions about future directions in government policy. The outcome will include objective summaries of relevant research and suggest policy options or may even argue for a particular course of action.
· Preparatory work: Q1-2021
· Draft presentation: Q4-2021
· Final version: Q2-2022
Initiators / Participants
The initiators of this project are Prof. Dr. Steven Truxal at University of Leiden and Dr. Ricardo Pilon (independent of the Millennium Aviation Institute) in the Netherlands. Other participants include airlines, airports, Minitry of Transport, electric aircraft manufacturers.