The potential for medium-term growth at Schiphol Airport -

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1 The potential for medium-term growth at Schiphol Airport - An assessment of alternative policy measures Marco Kouwenhoven, Eric Kroes () Jan Veldhuis (Amsterdam Aviation Economics)

2 Contents Study background Objectives Approach: simulations using the ACCM model Input scenarios 22 Policy measures investigated Resulting impacts Conclusions Airneth 27 Slide 2

3 Objectives: Study for Dutch Ministry of Transport: What growth could be expected for Schiphol Airport until 22 if there would be no capacity restrictions? Would the expected future demand fit within the current restrictions (both runway capacity and noise limitations)? If not, What would be the welfare implications? What would be the policy options? How effective would these be? Airneth 27 Slide 3

Would the expected future demand fit within the current restrictions (both runway capacity and

4 Background: Why new medium term forecasts? Incidental factors 11 September 21 War Iraq SARS Structural developments Air France-KLM Low Cost Carriers New medium/long term macro-economic scenarios Airneth 27 Slide 4

5 Base Year (23) Approach: Use of ACCM Model Macro-economic data Passenger counts Level-of-service Traveller choice module Airline choice module Output Macro-economic data Level-of-service Iteration to fit capacity constraints Output Airneth 27 Slide 5

Airline choice module Output Macro-economic data

6 Base Year (23) Approach: Use of ACCM Model Macro-economic data Passenger counts Level-of-service Traveller choice module Airline choice module Output Growth factor Growth factor Macro-economic data Level-of-service Forecast Year (22) Traveller choice module Airneth 27 Slide 6

choice module Output Growth factor Growth factor Macro-economic data

7 Base Year (23) Approach: Use of ACCM Model Macro-economic data Passenger counts Level-of-service Traveller choice module Airline choice module Output Growth factor Growth factor Macro-economic data Level-of-service Traveller choice module Iteration to fit capacity constraints Airline choice module Output Forecast Year (22) Airneth 27 Slide 7

Growth factor Macro-economic data Level-of-service Traveller choice module Iteration

8 Traveller choice module Observed base year demand pattern Market growth: GDP development Trade development Price development Network development Competition: Airports Airlines/routes Car, high-speed train Airneth 27 Slide 8

development Price development Network development

9 Airline choice module Observed base year supply pattern Aircraft size Cost per seat Market size Degree of competition Technology Fleet renewal Fleet expansion Time of day Passenger preferences Airneth 27 Slide 9

Degree of competition Technology Fleet renewal Fleet

10 Airneth 27 Slide 1

11 Scenarios: Four futures for Europe Private 1 Global Economy 3 Transatlantic Markets National International 2 Strong Europe 4 Public Regional Communities Source: CPB (23) Airneth 27 Slide 11

International 2 Strong Europe 4 Public Regional

12 Four futures for Mainport Schiphol Private 1 Global Economy worldwide aviation growth HIGH hub function Schiphol IMPORTANT 3 Transatlantic Markets worldwide aviation growth HIGH hub function Schiphol LIMITED National International 2 Strong Europe worldwide aviation growth LOW hub function Schiphol IMPORTANT 4 Public Regional Communities worldwide aviation growth LOW hub function Schiphol LIMITED Airneth 27 Slide 12

National International 2 Strong Europe worldwide aviation growth LOW hub function Schiphol IMPORTANT 4

13 Expected growth of Schiphol is strongly dependent on scenario assumptions Number of flights (22, x1) Potential (unrestricted) Slottrading Global Economy Strong Europe Transatlantic Markets Regional Communities Airneth 27 Slide 13

Potential (unrestricted) Slottrading Global Economy Strong

14 Expected growth of Schiphol is strongly dependent on scenario assumptions Number of flights (22, x1) Potential (unrestricted) Slottrading Global Economy Strong Europe Transatlantic Markets Regional Communities Airneth 27 Slide 14

15 In two scenarios potential demand cannot be met given current capacity constraints Number of flights (22, x1) Potential (unrestricted) Slot allocation (reference) Slottrading Global Economy Strong Europe Transatlantic Markets Regional Communities Airneth 27 Slide 15

(unrestricted) Slot allocation (reference) Slottrading Global Economy

16 Capacity Schiphol Airport In high growth scenarios demand exceeds supply Physical capacity: 625, movements Noise capacity: Currently: about 48, movements Increasing to 55, 6, movements in 22 Increase in noise capacity depends on policy measures Airneth 27 Slide 16

Currently: about 48, movements Increasing to 55, 6, movements in

17 Policy options Slot trading Instead of existing slot allocation General charges Ticket tax VAT Fuel tax Specific charges Take-off/landing charges depending on time-of-day Take-off/landing charges depending on technology class airplane Airneth 27 Slide 17

Take-off/landing charges depending on time-of-day

18 System of slot-trading instead of slotallocation would allow for more flights Number of flights (22, x1) Potential (unrestricted) Slot allocation (reference) Slot trading Global Economy Strong Europe Transatlantic Markets Regional Communities Airneth 27 Slide 18

19 Slot trading stimulates the use of newer type aircraft 1% 9% 8% 7% 6% Slot allocation Slot trading E D 5% 4% C 3% 2% 1% % 23 Global Economy Strong Europe Transatl.Markets Reg.Commun. B Airneth 27 Slide 19

20 Relative impacts of policy options on Aircraft Movements Schiphol Slot trading Ticket tax VAT Fuel tax Evening/night charge Old technology charge Airneth 27 Slide 2

5-5 -5-5 -1-1 -1 Fuel tax Evening/night charge Old

21 Relative impacts on Market Share SkyTeam 4% Slot trading 4% Ticket tax 4% VAT 2% 2% 2% % % % -2% -2% -2% -4% -4% -4% 4% Fuel tax 4% Evening/night charge 4% Old technology charge 2% 2% 2% % % % -2% -2% -2% -4% -4% -4% Airneth 27 Slide 21

22 Relative impacts on Transfer Percentage 6% Slot trading 6% Ticket tax 6% VAT 4% 4% 4% 2% 2% 2% % -2% % -2% % -2% -4% -4% -4% 6% Fuel tax 6% Evening/night charge 6% Old technology charge 4% 4% 4% 2% 2% 2% % -2% % -2% % -2% -4% -4% -4% Airneth 27 Slide 22

23 Impact on Consumer Surplus (mio Euro) 2 Slot trading 4 Ticket tax 4 VAT Fuel tax 4 Evening/night charge 4 Old technology charge Airneth 27 Slide 23

24 Assessment of policy options Efficiency Side effects Robustness Slot trading General charges - +/- - Specific charges + +/- +/- Airneth 27 Slide 24

25 Conclusions (1) Potential for substantial growth at Schiphol airport in period up to 22 Depends on macro-economic scenario Capacity limits elsewhere increase potential demand further Real chance that airport capacity will be reached before 22 Noise capacity more restrictive than runway capacity Measures needed to accommodate growth Incentives to use less noisy aircraft: differential pricing Airneth 27 Slide 25

26 Conclusions (2, tentative) Slot trading (if possible) would be very effective, few side effects and robust General charges: ticket tax/vat/fuel tax may be effective but can have negative side effects and are not robust Specific charges: take off/landing by time of day/ aircraft technology class are potentially effective, but the side effects are uncertain, and the effects are not entirely robust Airneth 27 Slide 26

27 Conclusions (3) But: research continues and more simulations will be done in the coming weeks Airneth 27 Slide 27

28 For more information, please contact: Eric Kroes

The impact of secondary slot trading at Amsterdam Airport Schiphol. Jaap de Wit SEO Economic Research University of Amsterdam

The impact of secondary slot trading at Amsterdam Airport Schiphol Jaap de Wit SEO Economic Research University of Amsterdam Study commissioned by the Dutch Ministry of Transport To explore the potential