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An Empirical Assessment of Aviation Charges in Germany

GAP Workshop. An Empirical Assessment of Aviation Charges in Germany. Presented by Plamena Ivanova (HU) Marius Barbu (FHW) David Hörnle (FHW ). Based on Diploma Thesis of Chi Wah Li, 2007. Berlin 10th April, 2008. Outline. Methodology

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An Empirical Assessment of Aviation Charges in Germany

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  1. GAP Workshop An Empirical Assessment of Aviation Charges in Germany Presented by Plamena Ivanova (HU) Marius Barbu (FHW) David Hörnle (FHW) Based on Diploma Thesis of Chi Wah Li, 2007 Berlin 10th April, 2008

  2. Outline • Methodology • Development of Charges, Passengers and Revenues, Timeline • Airplane Related Charges in 2007 • Share of Passenger Charges in Airside Charges, 1998-2007 • Airside Charges in 2007 • Fixed vs. Variable Charges in 2007 • What is the Welfare Effect?

  3. I. Methodology

  4. Methodology of benchmarking • What do these numbers mean? • Can we rank the airports based on these fees? • What further assumptions are necessary?

  5. Methodology of benchmarking • Step • Identify the charges you are going to compare Landing fee Passenger fee Security fee Noise fee Central Infrastructure

  6. Methodology of benchmarking 2. Step Identify the fleet mix Helpful: use similar types of airports which serve the same fleet mix, otherwise might be difficult to compare. The results obtained are vaild only for one airport Is the fleet mix changing over time? Shall it be adjusted over the period under consideration?

  7. Methodology of benchmarking 3. Step Make specific assumptions about the types of passengers Domestic EU NON EU Transit Transfer Düsseldorf (2008): Domestic: 13,45 EUR EU: 14,55 EUR Non EU: 14,60 EUR Transit/ Transfer 8,25 EUR

  8. Methodology of benchmarking 4. Step Determine the load factor – might be useful to obtain the data in the future directly from the airports Differenciate low cost airlines vs. „traditional“ airlines

  9. Methodology of benchmarking 5. Step Charges we ignored (Groundhandling) Ramp equipment and Aircraft handling charges (fueling) Transportation charges (crew, passengers, baggage) Security, x-ray charges Customs reporting systems Others

  10. Methodology of benchmarking Having determined the previous components, we can now proceed with computing the charges according to: 4. Step Choose a time period – time changes and all parameters too 5. Step Choose a currency – domestic, specific or artificial

  11. Methodology of benchmarking • 6. Further assumptions • Time of the day – day or night • Peak or off-peak periods • Parking time for aircrafts • As this is the most sensitive point within the analysis, the assumptions concerning these issues should be based on actual empirical data or substantiated through interviews.

  12. II. Some preliminary results and further research questions

  13. Charges, Passengers, Revenues Development, Timeline Airside real charges for Turnaround-Flight (given assumptions) ~ -17% Total PAX in Germany ~ +34% Total real revenues of all German Airports (incl. non-aviation) ~ +43%

  14. Research Question • Airside prices are falling but total revenues are increasing • Increase in passengers • Increase in nonaviation • Assumptions: • Either fleet mix has changed or • airports discount charges or • loading factor changed or • increase in landside revenues? Or....

  15. Airplane Related Charges, in 2007 Average Level of Charges for a Turnaround Flight, in 2007 Charges per Turnaround Flight According to Airplane Size, in 2007 Big Airplanes Medium Airplanes Small Airplanes

  16. Research Question • Why is the slope of big-airplane-charges not increasing steadily? • Does FRA‘s monopoly position play a role in it‘s charges structure? • How about Dresden? • Are airports trying to increase their traffic with low charges?

  17. Airside Charges, in 2007 Share of Passenger Charges in Airside Charges (§43), in 2007: Share of Airside Charges (§43) in Total Charges, in 2007:

  18. Fixed vs Variable Charges of Total Charges (§43 + ZI), in 2007 How is the share of variable charges influencing airports performance? How about the allocation of risks?

  19. Share of Passenger Charges in Airside Charges, 1998 - 2007 There is an increase of aprox. 65 % over the period 1998-2007 Does this also increase the risk of airports?

  20. What is the Welfare Effect for… • Airports (Income and Risk)… • Airlines (Income and Risk)… • Passengers (Prices)… • Society (Quality of Transport Services, Risks)?

  21. Thank you for your attention! GERMAN AIRPORT PERFORMANCE A Joint Project of: Berlin School of Economics (FHW) University of Applied Sciences Bremen Int. University of Applied Sciences Bad Honnef

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