Economic benefits of European airspace modernization

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 arechallenges to deal with if these gains are to continue. Sufficient capacity both in the air and on theground and an efficiently organized airspace are key in this respect.

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

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