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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.
  • Handle: RePEc:ces:ceswps:_2547
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    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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