An Empirical Assessment of Aviation Charges in Germany

An Empirical Assessment of Aviation Charges in Germany

Presented by

Plamena Ivanova (HU)Marius Barbu (FHW)David Hörnle (FHW)

GAP Workshop

Berlin10th April, 2008

Based on Diploma Thesis of Chi Wah Li, 2007

2Plamena Ivanova, Marius Barbu, David Hörnle

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?


I. Methodology


AirportLanding fee 2007 A320-

200

BRE 653,42

CGN 732,89

DRE 548,31

DUS 380,12

FMO 671,79

FRA 278,23

HAM 615,34

MUC 653,39

STR 409,95

1. What do these numbers mean?

2. Can we rank the airports based on these fees?

3. What further assumptions are necessary?

Methodology of benchmarking




1. StepIdentify the charges you are going to compare

Landing fee

Passenger fee

Security fee

Noise fee

Central Infrastructure


2. StepIdentify 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?



3. StepMake 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


4. StepDetermine the load factor – might be useful to obtain the data in the future directly from the airports

Differenciate low cost airlines vs. „traditional“ airlines



5. StepCharges we ignored (Groundhandling)

Ramp equipment and

Aircraft handling charges (fueling)

Transportation charges

(crew, passengers, baggage)

Security, x-ray charges

Customs reporting systems

Others



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



6. Further assumptions

Time of the day – day or nightPeak or off-peak periodsParking 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.



II. Some preliminary

results and further

research questions


Charges, Passengers, Revenues Development, Timeline

- €

500,00 €

1.000,00 €

1.500,00 €

2.000,00 €

2.500,00 €

3.000,00 €

3.500,00 €

4.000,00 €

4.500,00 €

5.000,00 €

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

40

60

80

100

120

140

160

180

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Millio

ne

n

~ -17%

~ +34%

~ +43%

Total real revenues of all German Airports (incl. non-aviation)

Total PAX in Germany

Airside real charges for Turnaround-Flight (given assumptions)


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....


Airplane Related Charges, in 2007

Average Level of Charges for a Turnaround Flight, in 2007

Big Airplanes

Medium Airplanes

Small Airplanes

Charges per Turnaround Flight According to Airplane Size, in 2007


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?


Airside Charges, in 2007

0%

20%

40%

60%

80%

100%

FMO STR HAM BRE NUE CGN SXF DRS LEJ HAJ THF MUC TXL DUS FRA

Variable Charges of §43a LuftVZO Fix Charges of §43a fLuftVZO

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

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

0

10

20

30

40

50

60

70

80

90

100

FMO STR HAM BRE NUE CGN SXF DRS LEJ HAJ THF MUC TXL DUS FRA


Fixed vs Variable Charges of Total Charges (§43 + ZI), in 2007

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DUS TXL THF FRA HAJ SXF HAM STR MUC FMO BRE CGN NUE LEJ DRS

Fixed Charges Variable Charges

How is the share of variable charges influencing airports performance?

How about the allocation of risks?


Share of Passenger Charges in Airside Charges, 1998 - 2007

0%

10%

20%

30%

40%

50%

60%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

There is an increase of aprox. 65 % over the period 1998-2007

Does this also increase the risk of airports?


What is the Welfare Effect for…

• Airports (Income and Risk)…

• Airlines (Income and Risk)…

• Passengers (Prices)…

• Society (Quality of Transport Services, Risks)?


Thank you for your attention!

A Joint Project of:Berlin School of Economics (FHW)University of Applied Sciences BremenInt. University of Applied Sciences Bad Honnef

GERMAN AIRPORT

PERFORMANCE

Documents

An Empirical Assessment of Aviation Charges in Germany