1. externalities – scale economies – UK airports
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
Chikage Miyoshi
Department of Air Transport
Cranfield University

2. 1. Air Pollution and CO2 NOx SOx HC CO2
Monetary value (price per metric ton)
Emission Factors (ICAO Air Quality Manual)
€4.7 - € 26
in 1999 prices (ExternE, 1999)
€7.2 - € 54
in 1999 prices (ExternE, 1999)
€4.2 - € 36
in 1999 prices (ExternE, 1999)
£70 t/C
in 2000 prices (UK Gov.)
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. Cost Function Specification
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 X
Cargo X
Labor
Labor cost per FTE
Social Costs
16 valuation scenarios
2 outputs
5 Input prices

5. Stochastic Frontier Analysis
2. Data and Methodology
UK Airport Database
Stochastic Frontier Analysis
27 UK airports
Quasi-balanced panel
381 observations
Bayesian Inference

6. Average Airport: 2 million annual passengers
3. Scale elasticities and MES
Average Airport: 2 million annual passengers

7. 3. Individual airports
Most airports still enjoy social scale economies
Low-Cost operations increase airports’ MES
Externalities reduce airports’ MES between 10-50%
Full-service operations appear to reduce airports’ MES
Scale elasticities decrease with airport size
Only Heathrow falls into diseconomies of scale

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