Determinants of an Airport Productivity Benchmark

branko_bubaloBy Branko Bubalo

Today’s airports are expansive and expensive infrastructures with considerable impact on population and the environment. In the past, we have seen almost unconstrained exponential growth of air transportation in the Western world, which has been fueled by deregulation and partial privatization of air transportation in the U.S. and in Europe. Today, North-American and European markets as well as major routes have matured considerably. Therefore, future growth of demand will happen in the Asian and in the Middle-Eastern markets, simultaneous with increasing wealth, consumption, and education. Having a functional and efficient infrastructure is essential for future growth in all economies. The European market will not stagnate at the current level; Europe will continue to serve as a gateway between the Americas and Asia, and it will grow, on average, at a comparably lower rate. There will be considerable growth at Eastern European airports. This results in a doubling of traffic or passengers in the next 16 to 20 years, putting currently congested airports under enormous pressure. The question for European institutions and policy is: Do European airports have the capacity to serve future demand or will there be a widening capacity gap?
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Deregulation in the Airline Industry: The Impact of Parallel Alliances on Social Surplus when Airlines face Different Cost Functions

By Livia Lablans

lablansOn behalf of my master thesis at VU University Amsterdam, I did research on the effects to social welfare when different cost functions are used and government intervention is incorporated within the airlines optimization problem. The analysis is carried out by means of a model in which two out of three competing airlines decide to cooperate. Both the incorporation of government intervention and the model set-up are inspired by the KLM-AF merger, which is subject to a restriction on the distribution of traffic between Schiphol and Charles De Gaulle airports until 2010. The results of the analysis show that the government restriction on the allocation of traffic via certain hub airports gives sub-optimal outcomes. Furthermore, I argue more research should be carried out on a more precise specification of the cost function within the airlines’ optimization problem since this appears to be crucial for the results of similar research.

Book Review: Airline Network Development in Europe

By Prof. Dr. Frank Witlox

This book explores what the consequences of a deregulated EU air transport market are for airline network development and airport planning. The book analyzes changes in airline route reconfigurations, changes in airport hierarchy and individual airport network quality, and changes in strategic airport capacity planning. The book provides airports with information on how to deal with increased uncertainty as a result from changing airline network behavior.

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