IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v15y2009i4p158-165.html
   My bibliography  Save this article

The implications of environmental costs on air passenger demand for different airline business models

Author

Listed:
  • Lu, Cherie

Abstract

Various environmental measures, including both regulations and fiscal instruments, have been used at airports globally to reduce the impacts of aircraft noise as well as aircraft engine emissions. Internationally, it is recognized that the costs of environmental and social externalities of air transport must be internalized and paid for by the aviation industry and its users. The use of noise related charges or taxes, which theoretically should be based on their respective social costs, has been proved to be effective at some European airports. This research aims to investigate the impacts of environmental costs, through environmental charges, on air passenger demand for different airline business models. The paper presents the mathematical models measuring the social costs of aircraft noise and engine emissions as a basis for setting up environmental charges. Six intra-European short-haul routes in two city pairs, namely London–Amsterdam and London–Paris, are selected for the empirical analysis. The environmental charges are then hypothetically applied to airlines with two different business models, full service carriers (British Airways and Air France-KLM) and low cost airlines (EasyJet). The results show that the potential percentages of demand reduction for both leisure and business passengers would be higher for Easyjet's markets, although with less environmental cost per passenger.

Suggested Citation

  • Lu, Cherie, 2009. "The implications of environmental costs on air passenger demand for different airline business models," Journal of Air Transport Management, Elsevier, vol. 15(4), pages 158-165.
    • Handle: RePEc:eee:jaitra:v:15:y:2009:i:4:p:158-165
    DOI: 10.1016/j.jairtraman.2008.09.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S096969970800118X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2008.09.019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cherie Lu & Peter Morrell, 2006. "Determination and Applications of Environmental Costs at Different Sized Airports – Aircraft Noise and Engine Emissions," Transportation, Springer, vol. 33(1), pages 45-61, January.
    2. Fridström, Lasse & Thune-Larsen, Harald, 1989. "An econometric air travel demand model for the entire conventional domestic network: The case of Norway," Transportation Research Part B: Methodological, Elsevier, vol. 23(3), pages 213-223, June.
    3. David Levinson & David Gillen & Adib Kanafani, 1998. "The social costs of intercity transportation: a review and comparison of air and highway," Working Papers 199801, University of Minnesota: Nexus Research Group.
    4. Tae H. Oum & Waters, W.G. & Jong Say Yong, 1990. "A survey of recent estimates of price elasticities of demand for transport," Policy Research Working Paper Series 359, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pagoni, Ioanna & Psaraki-Kalouptsidi, Voula, 2016. "The impact of carbon emission fees on passenger demand and air fares: A game theoretic approach," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 41-51.
    2. Mengyuan Sun & Yong Tian & Yao Zhang & Muhammad Nadeem & Can Xu, 2021. "Environmental Impact and External Costs Associated with Hub-and-Spoke Network in Air Transport," Sustainability, MDPI, vol. 13(2), pages 1-21, January.
    3. Ticiano Costa Jordão, 2016. "Analysis of fuel efficiency of largest European airlines in the context of climate change mitigation," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 39(3/4), pages 253-270.
    4. Davies, Zoe G. & Armsworth, Paul R., 2010. "Making an impact: The influence of policies to reduce emissions from aviation on the business travel patterns of individual corporations," Energy Policy, Elsevier, vol. 38(12), pages 7634-7638, December.
    5. Lo, Pak Lam & Martini, Gianmaria & Porta, Flavio & Scotti, Davide, 2020. "The determinants of CO2 emissions of air transport passenger traffic: An analysis of Lombardy (Italy)," Transport Policy, Elsevier, vol. 91(C), pages 108-119.
    6. Salvador Cruz Rambaud & Joaquín López Pascual & Juan Carlos Meléndez Rodríguez, 2021. "Sustainability in the Aerospace Sector, a Transition to Clean Energy: The E 2 -EVM Valuation Model," Sustainability, MDPI, vol. 13(12), pages 1-17, June.
    7. Belén Payán‐Sánchez & Miguel Pérez‐Valls & José Antonio Plaza‐Úbeda & Diego Vázquez‐Brust, 2022. "Network ambidexterity and environmental performance: Code‐sharing in the airline industry," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1169-1183, March.
    8. Mancuso, Paolo, 2014. "An analysis of the competition that impinges on the Milan–Rome intercity passenger transport link," Transport Policy, Elsevier, vol. 32(C), pages 42-52.
    9. Hughes, Larry, 2015. "The effects of event occurrence and duration on resilience and adaptation in energy systems," Energy, Elsevier, vol. 84(C), pages 443-454.
    10. Grampella, Mattia & Martini, Gianmaria & Scotti, Davide & Zambon, Giovanni, 2016. "The factors affecting pollution and noise environmental costs of the current aircraft fleet: An econometric analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 310-325.
    11. Scheelhaase, Janina & Maertens, Sven & Grimme, Wolfgang & Jung, Martin, 2018. "EU ETS versus CORSIA – A critical assessment of two approaches to limit air transport's CO2 emissions by market-based measures," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 55-62.
    12. Grampella, Mattia & Lo, Pak Lam & Martini, Gianmaria & Scotti, Davide, 2017. "The impact of technology progress on aviation noise and emissions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 525-540.
    13. Niu, Shih-Yuan & Liu, Chiung-Lin & Chang, Chih-Ching & Ye, Kung-Don, 2016. "What are passenger perspectives regarding airlines' environmental protection? An empirical investigation in Taiwan," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 84-91.
    14. Belén Payán-Sánchez & Miguel Pérez-Valls & José Antonio Plaza-Úbeda, 2019. "The Contribution of Global Alliances to Airlines’ Environmental Performance," Sustainability, MDPI, vol. 11(17), pages 1-16, August.
    15. Oesingmann, Katrin, 2022. "The effect of the European Emissions Trading System (EU ETS) on aviation demand: An empirical comparison with the impact of ticket taxes," Energy Policy, Elsevier, vol. 160(C).
    16. Hu, Rong & Chen, Lin & Zheng, Lijun, 2018. "Congestion pricing and environmental cost at Guangzhou Baiyun International Airport," Journal of Air Transport Management, Elsevier, vol. 70(C), pages 126-132.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Demir, Emrah & Huang, Yuan & Scholts, Sebastiaan & Van Woensel, Tom, 2015. "A selected review on the negative externalities of the freight transportation: Modeling and pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 95-114.
    2. Sibdari, Soheil & Mohammadian, Iman & Pyke, David F., 2018. "On the impact of jet fuel cost on airlines’ capacity choice: Evidence from the U.S. domestic markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 111(C), pages 1-17.
    3. Alexander, David W. & Merkert, Rico, 2017. "Challenges to domestic air freight in Australia: Evaluating air traffic markets with gravity modelling," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 41-52.
    4. Mohammadian, Iman & Abareshi, Ahmad & Abbasi, Babak & Goh, Mark, 2019. "Airline capacity decisions under supply-demand equilibrium of Australia’s domestic aviation market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 108-121.
    5. Swait, Joffre & Eskeland, Gunnar S., 1995. "Travel mode substitution in Sao Paulo : estimates and implications for air pollution control," Policy Research Working Paper Series 1437, The World Bank.
    6. Mancuso, Paolo, 2014. "An analysis of the competition that impinges on the Milan–Rome intercity passenger transport link," Transport Policy, Elsevier, vol. 32(C), pages 42-52.
    7. Delucchi, Mark A. & McCubbin, Donald R., 2010. "External Costs of Transport in the U.S," Institute of Transportation Studies, Working Paper Series qt13n8v8gq, Institute of Transportation Studies, UC Davis.
    8. Fouquet, Roger, 2012. "Trends in income and price elasticities of transport demand (1850–2010)," Energy Policy, Elsevier, vol. 50(C), pages 62-71.
    9. Jerrel R Yzer & Warren E Walker & Vincent A W J Marchau & Jan H Kwakkel, 2014. "Dynamic Adaptive Policies: A Way to Improve the Cost—Benefit Performance of Megaprojects?," Environment and Planning B, , vol. 41(4), pages 594-612, August.
    10. World Bank, 2013. "Republic of Armenia : Accumulation, Competition, and Connectivity," World Bank Publications - Reports 16781, The World Bank Group.
    11. Rich, J. & Kveiborg, O. & Hansen, C.O., 2011. "On structural inelasticity of modal substitution in freight transport," Journal of Transport Geography, Elsevier, vol. 19(1), pages 134-146.
    12. Yuen, Andrew & Zhang, Anming & Hui, Yer Van & Leung, Lawrence C. & Fung, Michael, 2017. "Is developing air cargo airports in the hinterland the way of the future?," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 15-25.
    13. Alfred Tovias, 1991. "EC‐Eastern Europe: A Case Study of Hungary," Journal of Common Market Studies, Wiley Blackwell, vol. 29(3), pages 291-315, March.
    14. Richard S.J. Tol, 2006. "The Impact of a Carbon Tax on International Tourism," Papers WP177, Economic and Social Research Institute (ESRI).
    15. repec:rnp:ecopol:1278 is not listed on IDEAS
    16. Fildes, Robert & Wei, Yingqi & Ismail, Suzilah, 2011. "Evaluating the forecasting performance of econometric models of air passenger traffic flows using multiple error measures," International Journal of Forecasting, Elsevier, vol. 27(3), pages 902-922, July.
    17. Eskeland, Gunnar S. & Feyzioglu, Tarhan N., 1997. "Is demand for polluting goods manageable? An econometric study of car ownership and use in Mexico," Journal of Development Economics, Elsevier, vol. 53(2), pages 423-445, August.
    18. Catherine Vibes & Marc Ivaldi, 2007. "Analyse coût-bénéfice dans un contexte de concurrence intermodale et intramodale," Économie et Prévision, Programme National Persée, vol. 178(2), pages 41-49.
    19. Russell Pittman, 2004. "Russian Railways Reform and the Problem of Non‐discriminatory Access to Infrastructure," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 167-192, June.
    20. repec:rnp:ppaper:dok31 is not listed on IDEAS
    21. Wohlgemuth, Norbert, 1997. "World transport energy demand modelling : Methodology and elasticities," Energy Policy, Elsevier, vol. 25(14-15), pages 1109-1119, December.
    22. Cherie Lu, 2017. "Is There a Limit to Growth? Comparing the Environmental Cost of an Airport’s Operations with Its Economic Benefit," Economies, MDPI, vol. 5(4), pages 1-13, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:15:y:2009:i:4:p:158-165. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.