Economic benefits of European airspace modernization

Publication number: 2015-40
Authors: G. Burghouwt, R. Lieshout, T. Boonekamp & V. van Spijker
Commissioned by: IATA
Published by: SEO Economisch Onderzoek
ISBN: 978-90-6733-797-7

Europe is in a strong position in terms of connectivity. Since the start of liberalization of the
European air transport market about 25 years ago, consumers have benefitted from connectivity
growth within Europe as well as to/from other world regions. These gains include more directly
and indirectly served destinations, higher frequencies, shorter travel times and lower fares. The
connectivity gains have substantially reduced consumer’s costs to get from A to B and induced
significant consumer welfare benefits, as well as gains for the wider economy. But there are
challenges to deal with if these gains are to continue. Sufficient capacity both in the air and on the
ground and an efficiently organized airspace are key in this respect.

However, the European air transport system is not operating at its optimum level. Flight
trajectories are longer than needed. On average, flights in European airspace are 3% longer than
the great circle distance between origin and destination airport. Airspace inefficiencies and
capacity bottlenecks cause delays of around 10 minutes per flight. In contrast to the US, which
has just one single Air Navigation Service Provider (ANSP), Europe has 38 ANSPs to handle
approximately the same geographical area, resulting in higher than needed costs of Air
Navigation Service Provision for airlines and passengers. Examples of these costs are higher
ANSP user charges and longer than needed flight trajectories, with associated fuel burn and
environmental burden. But the much-needed modernization of European airspace is progressing
slowly and is lagging behind the targets set. Furthermore, airport capacity is expected to fall short
of future demand growth.

This study provides strong evidence on the economic benefits that airspace
modernization and removal of airport capacity constraints could generate for consumers,
businesses, trade, tourism and investment.

Category: 2016, Rogier Lieshout, Thijs Boonekamp, Valentijn van Spijker, SEO Aviation Economics