Optimal structure of air transport services when environnemental costs are taken into account

Etienne Billette de Villemeur and Kevin Guittet ()
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Kevin Guittet: LEEA - ENAC - Laboratoire d'Economie et d'Econométrie de l'Aérien - ENAC - Ecole Nationale de l'Aviation Civile

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Abstract: The consequences of environmental taxation on the supply of air transportation services by a profit-maximizing monopolist are examined. We consider both a passenger related tax and an aircraft related tax, highlight their respective impact on prices and frequency and derive their optimal combination. It is shown that there is a trade-off between the recovery of environmental damages and the distortions created by the tax. If tax can be negative. i.e. if the air transportation industry can be subsidized, it is possible to decentralize the optimal situation. We establish the optimal taxation system in a more realistic setting where taxes are to be positive and the ATM costs have to be recouped. To conclude we question the opportunity and the ability of (direct) regulatory mechanisms to address these issues in substitution and/or in addition to (the indirect action of) a fuel tax.

Keywords: air transportation; environmental costs; airport charges; fuel tax (search for similar items in EconPapers)
Date: 2004-07-01
Note: View the original document on HAL open archive server: https://enac.hal.science/hal-01022242v1
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Published in ATRS 2004, Air Transport Research Society World Conference, Jul 2004, Istanbul, Turkey. pp xxx

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