Assessing the Welfare Impact of Air Network Development



Assessing the Welfare Impact of Air Network Development

Authors

E Kroes, M Kouwenhoven, Significance, NL; J Veldhuis, SEO Economic Research, NL

Description

This paper describes how welfare effects of changes in flight frequency, air network development and capacity constraint for the Netherlands have been estimated. It covers both theory and application for Amsterdam airport.

Abstract

Many European airports face capacity problems in the near future, and Amsterdam Airport is no exception. Runway capacity is not the main bottleneck, noise capacity is more problematic. Traffic growth and capacity problems lead to changes in flight frequency, and more generally the air network. In order to facilitate a rational decision making process concerning investment plans or possible policy measures it is essential to have an estimate of the welfare effects.

In a study commissioned by the Dutch Ministry of Transport the authors have used a strategic air transport demand/supply equilibrium model (ACCM-3) to explore potential future demand levels for different scenarios. The forecasts have been made for unconstrained and capacity constrained situations, in order to establish the effects on consumer value due to the expected air network developments and the possible policy measures.

In this paper we describe the methodology we have used to estimate the consumer value of the different effects, related to the model specification that was used. We demonstrate how frequency increases, price reductions and changes in network structure are likely to increase the consumer value over time, at least as long as there is ample capacity. But when capacity limits are reached, this effect is reversed. Then the question becomes: which policy is most effective in limiting these negative effects.

We use transport economic theory to explain our methodology, and examples of the practical work we have carried oot for the Amsterdam Airport case to demonstrate the sorts of results we obtained. We shall demonstrate how the use of modern appraisal techniques has improved the decision making proces concerning airport policy in the Netherlands.

Publisher

Association for European Transport