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Lorenzo Castelli

DEEI - University of Trieste Via Valerio 10 I - 34127 Trieste - Italy

Phone: +39 - 040 - 676 7134Fax: +39 - 040 - 676 3460Email: castelli@units.it

DIPARTIMENTO DIELETTROTECNICAELETTRONICAINFORMATICA

STUDY OF THE IMPACT OF INNOVATIVE ROUTE CHARGE SCHEMES CONSIDERING ATC AND AIRLINES NEW PERSPECTIVES

CARE Innovative Action Project EUROCONTROL Brussels 

24th January 2002

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Contents

• Preliminary study – Motivations – Objectives– Results

• Proposal for further work– Objectives– Work plan

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The ATM system

EUROCONTROL& ANS

PROVIDERS

EUROPEANAIRSPACE

USERSEUROPEANAIRSPACE

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Motivations

• Effective capacity has matched traffic growth in the last ten years (+80%). However, capacity has been lagging behind demand.

• Airline and ATFM were the main primary delay causes in 2000. ATFM delays were mostly due to lack of ATC en-route capacity (68%)

Source: 4th Performance Review Report, EUROCONTROL, April 2001

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The ATM system

EUROCONTROL& ANS

PROVIDERS

EUROPEANAIRSPACE

USERS

Route charges

EUROPEANAIRSPACE

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Route Charges

They recover the costs incurred by states to provide en-route services and the costs incurred by EUROCONTROL

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Route charges – Airline Side

• No direct link exists between the level of service provided to flights (in terms of, e.g., imposed delay or deviations from the optimal route chosen) and route charges to be paid by carriers

• This situation provides to airlines little incentives to manage their operations in a way to allow the best use of the system capacity

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Route charges – ATC Side

The charging system based on a full cost recovery mechanism does not seem to give the necessary signals for ATC providers to supply the optimal amount of capacity at the right time and at the right location

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Our proposal

Investigation of economic measures to match air traffic services demand and supply for an efficient usage of the available capacity

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General aim of the study

To define and study the impact of alternative route charging pricing schemes that could increase the performance of ATC providers and of airspace users, and stimulate a more efficient use of ATC capacity

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Aims of the Preliminary Study

• To identify a general framework for evaluating different scenarios and different alternatives

• To provide sensible approaches, feasible methodologies and suitable techniques

• To identify the basic steps of a possible further and longer project

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Main results of the Preliminary Study

• Extensive literature review

• Deeper understanding of the ATM system

• Preliminary results on:– Passenger demand for air transportation– ATS market segmentation

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A first question

How does an airspace user react to a variation of one of its exogenous costs like, e.g., route charges?

IT DEPENDS……

on the characteristics of the airspace user.

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Over 95% of the total EUROCONTROL

Route charges revenues

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The ATM systemExtension

EUROPEANAIRSPACE

USERS

PASSENGERS

SHIPPERS

EUROCONTROL& ANS

PROVIDERS

Airfares RouteCharges

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Open issue

• To understand airline and passenger behaviours with respect to the current ATC charging mechanism, i.e., – the direct impact on airline demand in terms of, e.g.,

aircraft movements or Km flown – the indirect impact on the final passenger demand

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Impact of Route Charges

• Direct impact on the different airspace users – by characterizing the main categories of such users

and model their behaviour induced by a variation in route charges

• Indirect impact on the final passenger (or shipper) demand– by assessing the price elasticity of demand for air

transportation for the different groups of airspace users.

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General aim of the studyRevisited

To investigate the application of economic measures to promote status and ways of operations positively affecting the behaviour of the system, both from the point of view of ATS suppliers and of the customers

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Supply side

• Incentives for ANS providers: investigation on the applicability of performance based regulation techniques for the ATC centers

• Frontier benchmarking methods (e.g., Data Envelopment Analysis) to evaluate the performance of ATC centers

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Passenger demand for air transportation

EUROPEANAIRSPACE

USERS

PASSENGERS

SHIPPERS

EUROCONTROL& ANS

PROVIDERS

Airfares RouteCharges

WP 1

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Passenger demand

To provide a deep and sound knowledge of the behaviour of the demand for air transportation

– WP1: Analysis of the demand for passenger air transportation

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Analysis of the demand for passenger air transportation

• Preliminary study on 4 routes of Air Dolomiti in May 1999, 2000 and 2001

• Encouraging results

• Model extension

• Model refinement

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Air-Rail Modal Choice

• Important issue in the European context

• High speed trains compete with air transport for medium range distances

• Exploitation of WP 1 results

• Random utility models are likely to be used

• Need of further data collection

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Passenger modal choice

EUROPEANAIRSPACE

USERS

PASSENGERS

SHIPPERS

EUROCONTROL& ANS

PROVIDERS

Airfares RouteCharges

MEDIUM RANGE TRAIN TRIPS WP 3

WP 1

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Passenger demand

To provide a deep and sound knowledge of the behaviour of the demand for air transportation

– WP1: Analysis of the demand for passenger air transportation

– WP3: Analysis and modelling of passenger choice between air and rail transportation modes for a specific city pair.

Interactions with airlines are necessary…

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Air Dolomiti

• Regional airline– Fleet: 15 turbo-props, 3 jets– More than 600 flights per week (Summer 2001)– 30 National & international routes– 24 European destinations

• Business Traveller Market Oriented

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• Awards:– Customer Satisfaction Award 1999– 1998/99 ERA Airline of the Year Award– 1998 ATR Award for Excellence – Sapphire Award 1998 & 2001 – Emerald Awards 1997 – Gold Mercury Award 1996

• UNI EN ISO 9001 certification of quality (2000)

Air Dolomiti

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Air Dolomiti

• Not too small to be not significant;• Not too large to be sluggish in producing data and

information;• Complete availability of information, including

operational and tactical strategies;• Immediate access to the historical data of the company

databases;• The collaboration has already been successfully tested

during the preliminary study.

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ATS demand segmentation

EUROCONTROL& ANS

PROVIDERS

Airfares RouteCharges

PASSENGERS

SHIPPERS

MEDIUM RANGE TRAIN TRIPS

WP 3

WP 1

EUROPEAN AIRSPACEUSERS

WP 2

SEGMENTATION

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ATS demand segmentation

Identification of relatively homogeneous families for which similar attitudes and behaviours may be expected.

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Percentage of route charges paid by category of users, Years 1999 and 2000

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Airlines demand

To provide a deep and sound knowledge of the behaviour of airlines

– WP 4: at the operational level (e.g., how they react to traffic restrictions)

– WP 5: at the tactical level (e.g., how they react to exogenous price changes in terms of flight frequencies and route coverage)

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Airlines demand

EUROPEAN AIRSPACEUSERS

EUROCONTROL& ANS

PROVIDERS

RouteCharges

PASSENGERS

SHIPPERS

MEDIUM RANGE TRAIN TRIPS

WP 3

WP 1

WP 4

WP 5

WP 2

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To define and study the impact of economic

demand management measures to:– Limit the demand for access to busy airfields or to

congested airspace– Modify the spatial and temporal distribution of this

demand to bring it closer to the available capacity

Economic demand management strategies

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Economic demand management strategies

EUROPEAN AIRSPACEUSERS

EUROCONTROL& ANS

PROVIDERS

RouteCharges

PASSENGERS

SHIPPERS

MEDIUM RANGE TRAIN TRIPS

WP 3

WP 1

WP 4

WP 5

WP 2

WP 6

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Work planWP1: Analysis of the demand for passenger air transport;

WP2: ATS demand segmentation;

WP3: Analysis and modelling of passenger choice between air and rail transportation modes;

WP4: Analysis of airlines operational attitudes and behaviours;

WP5: Study of ATS demand elasticity of airspace users;

WP6: Design of economic demand management strategies.

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Work plan structure

WP 1

WP 5

WP 4

WP 3

WP 2 WP 6

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University of Padova

• Application of Operations Research to Airports and Air Traffic Flow Management:– “TAPE”, “OPAL” and “THENA” EU projects– Transportation Science, Operations Research, Air

Traffic Control Quarterly, Journal of Air Transport Management, etc.

• Collaboration with MIT “International Center for Air Transportation”

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TRIESTEPADOVA

Air DolomitiHQ

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Airlines demand analysis

University of Trieste

 

University of Padova Air Dolomiti

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Route charges - Formula

iii tMTOW

dr 50

n

irRThe total charge per flight (R) is

where ri is the charge generated in the FIRs of State i, and is calculated as:

where di is the great circle distance flown, expressed in hundreds of kilometres, MTOW is the Maximum Take Off Weight, expressed in metric tons, and ti is the unit rate.

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Results of regression analysis

Explanatory variableCoefficient Estimated coefficient T-statistic

Constant α 0.122 0.17

Population (POP) β1 -0.056 -1.652

GDP per-capita (GDP) β2 0.765 11.275

Frequency of flights (FREQ) β3 -0.164 -2.034

Airfare (FARE) β4 -1.217 -48.012

Aircraft seat capacity (CAPA) β5 0.762 5.107

Year (YEAR) β6 0.149 3.116

Hub airport (HUB) γ1 0.291 4.896

Tourist market (TOUR) γ2 0.122 1.516

Direct competition (COMP) γ3 -0.266 -4.785

Observations 3793    

R2adj 0.465    

Fisher Test 367.67    

Durbin-Watson Test 1.817    

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Drivers for Air Travel Demand

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The econometric model

)exp( 3216

54321

iiit

itiftitititift

COMPTOURHUBYEAR

CAPAFAREFREQGDPPOPAD

iiitit

iftitititift

COMPTOURHUBYEARCAPA

FAREFREQGDPPOPD

32165

4321

lnln

lnlnlnlnln

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Operating costs, Year 2000, IATA