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Airline Emission Charges: Effects on Airfares, Service Quality, and Aircraft Design

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  • Jan K. Brueckner
  • Anming Zhang

Abstract

This paper explores the effect of airline emissions charges on airfares, airline service quality, aircraft design features, and network structure, using a detailed and realistic theoretical model of competing duopoly airlines. These impacts are derived by analyzing the effects of an increase in the effective price of fuel, which is the path by which emissions charges will alter airline choices. The results show that emission charges will raise fares, reduce flight frequency, increase load factors, and raise aircraft fuel efficiency, while having no effect on aircraft size. Given that these adjustments occur in response to the treatment of an emissions externality that is currently unaddressed, they represent efficient changes that move society closer to a social optimum.

Suggested Citation

  • Jan K. Brueckner & Anming Zhang, 2009. "Airline Emission Charges: Effects on Airfares, Service Quality, and Aircraft Design," CESifo Working Paper Series 2547, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2547
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    References listed on IDEAS

    as
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    Cited by:

    1. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2016. "Air transport and high-speed rail competition: Environmental implications and mitigation strategies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 261-276.
    2. Tiziana D'Alfonso & Changmin Jiang & Valentina Bracaglia, 2015. "Air transport and high-speed rail competition: environmental implications and mitigation strategies," DIAG Technical Reports 2015-15, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    3. 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.
    4. Czerny, Achim I. & van den Berg, Vincent A.C. & Verhoef, Erik T., 2016. "Carrier collaboration with endogenous fleets and load factors when networks are complementary," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 285-297.
    5. Proost, Stef & Van Dender, Kurt, 2012. "Energy and environment challenges in the transport sector," Economics of Transportation, Elsevier, vol. 1(1), pages 77-87.
    6. Sheng, Dian & Li, Zhi-Chun & Fu, Xiaowen & Gillen, David, 2017. "Modeling the effects of unilateral and uniform emission regulations under shipping company and port competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 101(C), pages 99-114.
    7. Mayer, Robert & Ryley, Tim & Gillingwater, David, 2015. "Eco-positioning of airlines: Perception versus actual performance," Journal of Air Transport Management, Elsevier, vol. 44, pages 82-89.
    8. Adler, Nicole & Martini, Gianmaria & Volta, Nicola, 2013. "Measuring the environmental efficiency of the global aviation fleet," Transportation Research Part B: Methodological, Elsevier, vol. 53(C), pages 82-100.
    9. Brueckner, Jan K. & Abreu, Chrystyane, 2017. "Airline fuel usage and carbon emissions: Determining factors," Journal of Air Transport Management, Elsevier, vol. 62(C), pages 10-17.
    10. Zanin, Massimiliano & Delibasi, Tuba Toru & Triana, Julio César & Mirchandani, Vaishali & à lvarez Pereira, Emilio & Enrich, Alberto & Perez, David & Paşaoğlu, Cengiz & Fidanoglu, Melih & Koyuncu, , 2016. "Towards a secure trading of aviation CO2 allowance," Journal of Air Transport Management, Elsevier, vol. 56(PA), pages 3-11.
    11. repec:eee:appene:v:199:y:2017:i:c:p:13-24 is not listed on IDEAS
    12. repec:eee:trapol:v:60:y:2017:i:c:p:131-142 is not listed on IDEAS
    13. Sheu, Jiuh-Biing, 2014. "Airline ambidextrous competition under an emissions trading scheme – A reference-dependent behavioral perspective," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 115-145.
    14. Wang, Y.F. & Li, K.P. & Xu, X.M. & Zhang, Y.R., 2014. "Transport energy consumption and saving in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 641-655.
    15. Hansen, Mark & Liu, Yi, 2015. "Airline competition and market frequency: A comparison of the s-curve and schedule delay models," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 301-317.
    16. D’Alfonso, Tiziana & Jiang, Changmin & Bracaglia, Valentina, 2015. "Would competition between air transport and high-speed rail benefit environment and social welfare?," Transportation Research Part B: Methodological, Elsevier, vol. 74(C), pages 118-137.
    17. Zou, Bo & Hansen, Mark, 2012. "Flight delays, capacity investment and social welfare under air transport supply-demand equilibrium," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(6), pages 965-980.

    More about this item

    Keywords

    emissions; airlines;

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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