Air traffic control regulation with union bargaining

Thomas Blondiau, Amihai Glazer and Stef Proost

No 504891, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: This paper studies the behavior of the air traffic control (ATC) centers in the EU. We investigate the functioning of the European ATC sector with a union bargaining model. In this model, working conditions are the outcome of a bargaining game between the public air traffic control agency and the unions of air traffic controllers. We use this framework to understand the behavior of the ATC centers for wage formation, their reactions to a price-cap, adoption of new technologies, congestion pricing, effect of vertical disintegration, competition and the possible success of mergers between different national ATC centers. The theory is able to explain the slow progress in ATC performance in a unionized environment. We also test the theoretical model and estimate its parameters. The empirical analysis is based on actual ATC performance data.

Date: 2015-08
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Published in CES - Discussion paper series, DPS15.17 pages:1-25

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