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A critical examination of an airport noise mitigation scheme

A critical examination of an airport noise mitigation scheme
and an aircraft noise charge: the case of capacity expansion
and externalities at Sydney (Kingsford Smith) airport
Giovanni Nero
* , John A. Black
School of Civil and Environmental Engineering, University of New South Wales, Sydney 2052, Australia
Abstract
In the wake of the Australian airline liberalization in 1990 and its forecasted impact on air tra?c, ca-
pacity has been expanded at Sydney (Kingsford Smith) airport (Sydney KSA) – Australia’s busiest com-
mercial airport – with the construction of the third runway in 1994. Coinciding with the approval for this
capacity expansion, the Commonwealth Government amended the Federal Airports Corporation (FAC)
Act to direct the FAC to carry out activities which protect the environment from the e?ects of aircraft
operations, with the cost to be borne by the airline industry according to the ‘Polluter Pays Principle’. Noise
management plans were part of the conditions for developmental approval for a third runway. To this end,
since 1995, Sydney KSA imposes a noise levy designed to generate su?cient revenues to fund a noise
mitigation scheme. Although the issues of aircraft noise, in particular its impact on property values and
land use planning around the airport, have been extensively addressed in the literature, no one has em-
pirically examined the implications of new environmental policies in conjunction with airline liberalization
and change in airport infrastructure. Principles and policy analyses are discussed in this paper. By focusing
on the specifics of Sydney KSA, broader policy issues likely to be relevant for other major airports around
the world are discussed. ? 2000 Elsevier Science Ltd. All rights reserved.
Keywords: Airport environmental impact; Aircraft noise; Noise levy
1. Introduction
One of the major issue facing the airline industry in the 21th century will be its ability to
conciliate capacity expansion at major airports with the negative impact of increased airport
operations on surrounding neighbourhoods. Deregulation and liberalization of air transport in
Transportation Research Part D 5 (2000) 433–461
www.elsevier.com/locate/trd
* Corresponding author. Fax: +32-2-729-9108.
E-mail address: gio.nero@workmail.com (G. Nero).
1361-9209/00/$ - see front matter ? 2000 Elsevier Science Ltd. All rights reserved.
PII: S1361-9209(00)00010-9
di?erent parts of the world is one of the main forces driving greater demand for airport infra-
structure. The literature on airline economics has shown that hub-and-spoke networking, a leg-
acy/consequence of deregulation, exacerbates the development of major airports (see, e.g., Nero
and Black, 1998). On the other hand, there is a large literature on the negative impacts of airline
operations on surrounding neighbourhoods, with a particular focus on the e?ects of airport noise
on property values and land use planning around the airport (see, inter alia, Uyeno et al., 1993;
Levesque, 1994; Feitelson et al., 1996). The scope of this paper is to bring together the literature
on airline economics and the literature on the impacts of externalities associated with aircraft
operations.
1
More precisely, we investigate the implications of new environmental policies in
conjunction with airline liberalization and change in airport infrastructure at Sydney (Kingsford
Smith) airport (KSA).
We believe that Sydney KSA provides a unique framework for analysing this complex eco-
nomic, technological, social, political, and environmental issue. The capacity expansion at Sydney
KSA (construction of a third runway) has been initially described as ‘an engineering triumph’ but
a ‘social disaster’. We show that the typical trade-o? between capacity expansion and externality
can be substantially reduced if the capacity expansion is accompanied by (a) an environmentally
responsible and e?cient ground and air tra?c management, and (b) the application of a market-
based (economic) incentive approach following the Polluter Pays Principle. Our analysis suggests
that, for the Sydney KSA case, the timing as well as the extent of the implementation of points (a)
and (b) were mainly driven by political forces under popular pressures. Recent implementation of
new noise abatement procedures aiming at sharing the noise more equally was critical in con-
verting a ‘social disaster’ into a more socially acceptable solution.
One of the main lesson from this paper is that if airport authority (or government) understands
and balances economic and environmental impacts associated with airport expansion, it can
design operational practices (like preferential runway use system, preferential flight track use,
hours of operation, taxiing procedures, etc.), as well as optimal market-based incentives that
optimize the trade-o?s between the needs of the airport’s neighbours and those of the flying
community. Clearly, in the long run, such an integrated approach is in the interest of both the
aviation community (air services providers and its customers), and the airport’s neighbouring
community. The former is definitely likely to benefit from a capacity expansion. The latter can rely
on direct and/or indirect financial incentives compensating for amenity losses, and on the as-
surance that airport management is doing its best. Based on the example of Sydney KSA, we think
that there are reasons to be cautiously optimistic in designing schemes that conciliate capacity
expansion at a major airport (provided that it is physically feasible) and negative impacts of in-
creased airport operations on surrounding neighbourhoods.
The paper is organized as follows. Section 2 provides the context for the recent growth in air
tra?c at Sydney KSA. Section 3 provides the broad economic benefits of the decision to expand
runway capacity at Sydney KSA. Direct regulatory approaches and market-based incentive ap-
proaches are discussed in Section 4 in the context of international and Australian aviation leg-
islation. The noise levy charge (NLC) imposed at Sydney KSA is described in Section 5, in which
we also examine its properties and its potential limitations. The impacts of the NLC on aircraft
1
See also Janic (1999) for a review of accomplishments and problems associated with aviation and externalities.
434 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
operations and on passengers are examined in Section 6. Runway usage and flight paths ulti-
mately determine the spatial distribution of noise. Section 7 examines these distribution conse-
quences. Finally, in Section 8, our conclusions are set out.
2. Deregulation and tra?c growth at Sydney KSA
A growth in air tra?c volume/movements can be induced by a combination of several forces:
demand factors (e.g., increase of GDP), supply factors (e.g., a change in the industry structure
following a merger, or a technological change a?ecting aircraft), and institutional factors (e.g.,
policy changes bringing deregulation or liberalization). Environmental constraints are likely to
arise at any airport experiencing growth in tra?c volume. In a related paper, Nero and Black
(1998) have argued that the problem of environmental externalities is exacerbated by hub de-
velopment and that, to some extent, hubbing contributes to a spatial redistribution of external-
ities. Since the Australian airline industry has experienced major changes in competition policy
this last decade, a somewhat detailed structural analysis of the impact of deregulation on Sydney
KSA is needed at this point.
2
To this end, Table 1 presents a brief summary of the major his-
torical events that have shaped the Australian airline industry, and that have influenced, to some
extent, Sydney KSA development. In terms of competition policy, the major event is the dere-
gulation of the domestic market in November 1990.
Within the context of the above events, the following analysis shows the extent to which
Sydney KSA has retained its role and importance as the primary Australian domestic and in-
ternational gateway. Tables 2 and 3 show that Sydney KSA is by far the largest airport in
Australia. Throughout the 1990s, Sydney KSA passengers market share has been fairly stable,
although its share of international aircraft movements has been recently eroded by the Brisbane
airport.
Clearly, Sydney cannot play the role of an international hub (except maybe for the tra?c within
Australasia, especially New Zealand) since the location of Australia relegates it to an end-point
destination. By the same token, because Sydney is not centrally located on the continent, the
scope for Sydney KSA to perform as a major domestic hub airport (like, e.g., Dallas in the US) is
also limited. Australian airlines can rely on the large catchment area of Sydney but they lack the
large volume of connecting tra?c necessary to extensively operate a hub-and-spoke network
centred in Sydney.
3
It is therefore not surprising that, in contrast to the US deregulation, there
has been no dramatic network restructuring in Australia this last decade. Indeed, in terms of the
ranking of the top 20 Australian city-pair markets (which account for around 85% of all domestic
tra?c and 76% of all aircraft movements) there has been remarkable stability throughout the
1990–1998 period. Table 4 reports the principal tra?c statistics for the top 20 Australian city-pair
markets. Because the population is mainly distributed along the south-east coast (i.e., Sydney,
2
For a partial assessment of Australian airline deregulation see, inter alia, BTCE (1992), Grimm and Milloy (1993),
BTCE (1995a) and more recently Forsyth (1998b).
3
In 1989, it was estimated that around 27% of the total enplanements at Sydney were connecting passengers (FAC,
1990), while for the major US hubs this figure is typically superior to 50% (see Nero and Black, 1998).
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 435
Melbourne, Brisbane, and Adelaide), the tra?c among these centres accounts for more than 50%
of all domestic tra?c in 1998 (top six city-pairs in Table 4). Notice the wide heterogeneity in the
size of the top 20 city-pairs, as shown in Table 4. In order to derive meaningful average statistics,
weighted averages have been computed and presented in Table 5.
Table 1
Recent key dates and events for the Australian airline industry a
Date Events
1952 Introduction of the two-airline policy: this is a legislation to limit ‘uneconomic’ (i.e.,
destructive) competition between the two domestic airlines, the publicly owned Trans
Australia Airlines (TAA) and the private Australian National Airways (ANA)
1957 Private Ansett (then a regional airline) takes over ANA and forms a new airline Ansett–ANA,
which was later renamed Ansett Airlines
Late 1989 Pilots’ dispute a?ecting the Australian domestic market. Tra?c decline by approx. 20% in
1990
November 1990 End of the two-airline policy. The Australian domestic market is completely deregulated
February 1992 Merger between publicly owned Qantas and Australian Airlines (AA) (ex-TAA renamed in
1986). The new Qantas becomes the only major operator at that time with both a domestic and
an international network
Government adopts the principle of multiple designation in international air services
agreements. This enables Ansett Australia to launch its international operations in September
1993, while Qantas looses its status as sole designated flag-carrier
March 1993 Government sells to British Airways a 25% stake in Qantas. Subsequently, both airlines form a
strategic alliance
November 1994 Inauguration of the third runway at Sydney KSA
January 1995 Mandatory phase-out of Chapter 2 aircraft to be completed by April 2002
July 1995 Government sells to the public its remaining 75% of equity in Qantas, thereby becoming fully
privatized
October 1996 Private Air New Zealand purchases a 50% stake in Ansett Australia from TNT Corporation
November 1996 Creation of a single (Trans-Tasman) aviation market between Australia and New Zealand
July 1997 Government sells ‘Phase I’ airports (Brisbane, Melbourne, and Perth) for long-term lease
June 1998 Government sells 15 ‘Phase II’ airports (Adelaide, Canberra, Coolangatta, and Hobart are
among the largest airports) for long-term lease
June 1999 Cabinet policy announced to liberalize international air services to those countries reciprocally
allowing access to their markets for Qantas and Ansett, but to retain domestic duopoly
a Source: Various, including, inter alia, Findlay (1996), Hooper and Findlay (1997), Forsyth (1998a) and Financial
Review (1 June 1999).
Table 2
Market share in terms of aircraft movements for top three Australian airports according to type of tra?c a;b
Type 1989 1993 1997
SYD MEL BNE SYD MEL BNE SYD MEL BNE
International 46.6% 22.4% 14.0% 42.6% 19.0% 15.0% 41.2% 16.7% 17.8%
Domestic ? regional 14.8% 9.0% 6.8% 15.9% 9.9% 8.3% 17.3% 10.2% 9.2%
a Source: DTRD (1998a).
b Note: SYD – Sydney, MEL – Melbourne, BNE – Brisbane.
436 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
In Table 5, three groups of city-pairs have been considered. The top 20 city-pairs are sum-
marized in the first group, the (seven) city-pairs involving Sydney appear in the second group
(Sydney only), while the remaining (13) city-pairs appear in the last group (others except Sydney).
The results of Table 5 provide some guidance for an assessment of the likely impacts of dere-
gulation on Australian airports, in particular, on Sydney KSA. From the early period of dere-
gulation (1990–1991) to the most recent data (1997–1998) we have that, for the top 20 markets,
Table 4
Top 20 Australian airline city-pair markets for fiscal years 1991 and 1998 (ending on 30 June) a;b
City-pair Km Mvts Pax Seats
1991 1998 1991 1998 1991 1998
Melbourne–Sydney 706 23,665 34,440 2,725,931 4,896,388 3,913,527 6,652,701
Brisbane–Sydney 753 16,391 24,145 1,860,103 3,045,136 2,585,579 4,252,983
Brisbane–Melbourne 1381 6601 15,728 630,154 1,657,961 818,742 2,060,396
Adelaide–Melbourne 643 9049 13,752 890,668 1,300,129 1,214,190 1,768,883
Coolangatta–Sydney 680 8760 11,379 710,727 1,275,881 942,497 1,656,988
Adelaide–Sydney 1167 5633 11,470 528,836 1,076,516 707,038 1,460,673
Brisbane–Cairns 1391 4677 9037 408,567 958,401 552,592 1,393,025
Perth–Sydney 3284 3185 7164 335,695 916,627 492,759 1,193,525
Melbourne–Perth 2706 4771 6914 516,096 849,228 704,116 1,062,864
Canberra–Sydney 236 9727 22,168 562,651 830,576 953,665 1,322,573
Hobart–Melbourne 618 5817 6621 478,377 748,129 660,030 910,133
Canberra–Melbourne 470 7108 9486 443,271 695,580 743,748 1,080,093
Cairns–Sydney 1971 1135 4857 131,495 644,881 166,951 940,060
Melbourne–Coolangatta 1330 2728 4408 258,497 545,722 335,026 699,644
Brisbane–Townsville 1112 4352 4760 337,829 448,111 483,465 589,620
Lauceston–Melbourne 476 6312 5890 325,168 444,652 470,495 548,276
Adelaide–Perth 2120 2723 4316 248,777 405,876 339,490 555,234
Brisbane–Rockhampton 518 2907 5593 176,915 243,644 273,468 402,053
Brisbane–Mackay 797 1713 3983 91,287 223,619 142,407 332,272
Kalgoorlie–Perth 538 1453 4030 89,490 190,527 106,107 318,607
Total 129,107 210,061 11,750,474 21,307,584 16,605,892 29,200,601
a Source: BTCE (1995a) and DTRD (1998a).
b Note: Mvts – movements, Pax – passengers.
Table 3
Market share in terms of passengers for top three Australian airports according to type of tra?c a;b
Type 1989 1993 1997
SYD MEL BNE SYD MEL BNE SYD MEL BNE
International 50.1% 19.2% 11.8% 47.6% 18.3% 14.6% 49.0% 16.6% 16.4%
Domestic ? regional 33.6% 26.0% 16.3% 25.9% 20.2% 13.1% 25.6% 20.4% 13.6%
a Source: DTRD (1998a).
b Note: SYD – Sydney, MEL – Melbourne, BNE – Brisbane.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 437
tra?c (i.e., passengers) has increased by approximately 93%. Note that passenger demand and
seats supply have increased by a similar amount. The variation of tra?c/seats o?ered can be
loosely broken down as the sum of the change in flight frequency, the change in aircraft size, and
the change in load factor. The results of Table 5 suggest that more than 90% of the increase in
tra?c (and seats o?ered) has been accommodated (i.e., achieved) by the increase in flight fre-
quency of 75.5% and by the increase in aircraft size
4
of 12.6%, while the load factor has remained
fairly stable
5
(an increase only of 2.2 percentage point or 3.1%). The same general comments
apply to the more disaggregated data of the second and third row of Table 5. It is, however,
important to notice that the second group (Sydney only) has significantly and consistently larger
growth rates (except for load factors) than the other group. This result tends to suggest that, since
deregulation of the domestic airline industry, the more than proportional increase in tra?c on the
Sydney routes has been accommodated by a more than proportional increase in flight frequency
and a more than proportional increase in aircraft size.
Tables 6 and 7 display the evolution of aircraft movements and passengers at Sydney KSA
according to the di?erent types of markets, respectively. This enables us to more accurately de-
termine the factors that have driven the sustained growth in aircraft movements at Sydney KSA
during the last decade. Impressive growth rates are achieved for each segment of the market in
terms of both passengers and, although smaller, aircraft movements. Tables 6 and 7 show that
regional tra?c has experienced a phenomenal growth during the last decade at Sydney KSA. In
fact, Sydney KSA has consolidated its position as the largest centre for regional tra?c in Aus-
tralia, with its share of total Australian regional tra?c increasing from 11.9% to 20.5% in terms of
passengers, and from 8.6% to 14.0% in terms of aircraft movements during the 1989–1997 period.
This result suggests that Sydney KSA attracted proportionally more regional tra?c than other
airports during the 1989–1997 period. Deregulation has brought new regional airline operators
(some of the largest entrants are in fact subsidiaries of incumbents Qantas Airways and Ansett
Table 5
Summary statistics for top 20 city-pairs (1991–1998); weighted average by group of city-pairs a;b
City-pair group SL
1998
(km)
Mvts
1991–1998
(% growth)
Pax
1991–1998
(% growth)
Seats
1991–1998
(% growth)
LF AS
1991 1998 1991 1998
Total top 20 1039 +75.5% +93.2% +91.8% 70.8% 73.0% 135 152
Sydney only (7) 962 +79.1% +98.3% +96.0% 70.2% 72.6% 147 167
Others except
Sydney (13)
1155 +71.1% +85.7% +85.6% 71.5% 73.6% 117 129
a Source: BTCE (1995a) and DTRD (1998a).
b Note: SL – stage length, Mvts – movements, Pax – passengers, LF – load factor, AS – aircraft size.
4
This is an average figure. On the Canberra–Sydney market, the average aircraft size has dropped from 98 to 60
passengers.
5
This result contrasts with the US experience, since there aircraft size rather decreased after deregulation. Indeed, US
airlines have adapted their fleet to hub-and-spoke networks by using smaller airplanes.
438 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
Airlines) and these operators have been clearly attracted by the larger catchment area of the
Sydney basin, and by its ability to feed the domestic and international routes.
In summary, the fundamental changes in competition policy (deregulation) have stimulated
demand through a mix of lower fares and higher frequency (see also, BTCE, 1995a; Forsyth,
1998b). Major Australian airlines have also increased the size of their fleet in order to meet this
demand. Preliminary empirical evidence suggests that there has been little scope for major Aus-
tralian airlines to reshape their networks in order to gain economic e?ciency (see also Jatmika,
1999). Within this context, Sydney KSA has been able to strengthen its position as the primary
national and international gateway, and to continue to experience impressive growth rates in
aircraft movements and tra?c, without, however, becoming a large US-style hub airport.
6
Un-
doubtedly, this will have an impact on both airport capacity and aircraft noise, the primary
concerns of this paper. In fact, Sydney KSA has the worst record in terms of the magnitude of
aircraft noise on surrounding communities
7
around major Australian airports. This is, of course,
not surprising given Sydney KSA’s growth and its proximity (location) to the centre business
district. Table 8 provides an estimation of the population (private dwellings) exposed to noise in
the largest Australian cities.
Table 7
Passenger tra?c according to type of market at Sydney KSA a;b
Type Number of passengers
1987 1989 1991 1993 1995 1997 1987–1997
International 3,260,543 4,135,019 4,146,269 4,647,515 5,603,058 6,738,647 +106.7%
Domestic 6,660,302 7,607,247 7,634,518 10,042,288 11,700,902 12,373,548 +85.8%
Regional 266,029 357,386 580,191 796,388 1,039,371 1,566,775 +489.0%
Total 10,186,874 12,099,652 12,360,978 15,486,191 18,343,331 20,678,970 +103.0%
a Source: DTRD (1998a).
b Note: Regional aircraft include 38 seats or less, or a payload of up to 4200 kg.
Table 6
Aircraft movements according to type of market at Sydney KSA a;b
Type Number of aircraft
1987 1989 1991 1993 1995 1997 1987–1997
International 23,344 29,816 32,069 36,144 37,314 42,780 +83.3%
Domestic 87,425 92,332 85,260 107,150 114,681 106,920 +22.3%
Regional 33,392 41,798 48,592 59,261 69,213 93,892 +181.2%
Total 144,161 163,946 165,921 202,555 221,208 243,592 +69.0%
a Source: DTRD (1998a).
b Note: Regional aircraft include 38 seats or less, or a payload of up to 4200 kg.
6
Nevertheless, there is evidence of some hubbing activity at Sydney KSA (see also Section 5.2).
7
This is assessed using the Australian Noise Exposure Index (ANEI) which ranges from 0 to 40.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 439
3. Capacity expansion at Sydney KSA
Forecasted disequilibrium between supply of airport capacity and demand for airport slots has
led the Australian Federal Government to approve in 1989 the construction of a third runway at
Sydney KSA. The new runway is supposed to enable increased capacity at Sydney KSA until the
second Sydney airport is built.
8
Table 9 illustrates actual movements (i.e., demand for airport
slots) and practical capacity (i.e., supply of slots) before and after the opening of the third runway,
inaugurated in November 1994. Practical capacity increased by 32% following the addition of the
third runway.
A detailed (internal and external) costs–benefits analysis of the third runway has not been
carried out (to the best of our knowledge), and it is beyond the scope of this paper to undertake
such an analysis. The following available figures suggest that projected benefits are likely to
outweigh projected costs. The net present value of the cost of constructing the third runway at
Sydney KSA (including upgrading of terminals, support facilities, infrastructures and road
improvements) has been estimated at Aus$ 1400 million (in 1990 dollars) (FAC, 1990). The
Federal Airports Corporation
9
(FAC) estimated that without the third runway, cost of runway
delays resulting from congestion at Sydney KSA would amount to Aus$ 695 million per annum
in 1988 (in 1989 dollars) instead of an estimated cost of Aus$ 55 million per annum with the
third runway (FAC, 1990). The FAC also estimated that the capacity improvement at Sydney
KSA would generate additional output/production of approximately Aus$ 670 million annually
(in 1989 dollars) in the Sydney region alone during the period 1995–2000 (FAC, 1990). This
multiplier e?ect is likely to be larger if the full impact on the state of New South Wales and on
the other Australian states are quantified. These figures indicate that the projected benefits of
the added runway at Sydney KSA are likely to amount to several billions of dollars. On the
other hand, these figures on the costs of construction and operation of the additional runway
do not include the loss of welfare due to the imposition of external costs (principally additional
noise nuisances and aircraft emission) on society (mostly the population located around the
airport). Because airport expansion is associated with larger externalities, there is a clear trade-
o? between capacity expansion and negative externalities. Although the above figures suggest
Table 8
Approximate populations (private dwellings) exposed to aircraft noise as measured by ANEI, 1990/1991 a
City ANEI
20–25 25–30 30+
Sydney b 45,000 15,000 9000
Adelaide 14,500 7400 4100
Melbourne 14,900 1700 300
a Source: FAC, personal communication; AirServices Australia (1997, p. 100).
b In 1995, the corresponding numbers for Sydney are: 68,400; 29,300; and 11,000.
8
The decision as to whether or not to develop Badgerys Creek (the site acquired in 1985) has yet to be made by the
Government.
9
Now the Sydney Airport Corporation.
440 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
that, in this particular case, the cost of environmental externalities (based on the present
practice of quantifying them) is small compared to the projected economic benefits, transport
decision making must be cognizant of principles of sustainability where economic, social and
environmental factors and the mitigation of adverse impacts are included in the evaluation
framework.
4. Measures to address the externality problem at Sydney KSA
4.1. Commonwealth Government policy on aircraft noise
Aircraft noise – a contentious and enduring issue – has been discussed in a series of parlia-
mentary inquiries in Australia over the past three decades. In 1968, the House of Representatives
Select Committee on Aircraft Noise (HORSCAN) conducted 42 public hearings amounting to
4444 transcript pages of evidence. Its final report (HORSCAN, 1970) listed 14 recommendations
described by the Senate Select Committee on Aircraft Noise in Sydney (Commonwealth of
Australia, 1995, p. 9) as having ‘‘a remarkably contemporary tone’’. The only two recommen-
dations not carried out were a variable noise levy on aircraft type and research into the health
impacts of aircraft noise.
Building on the work of the House of the Representatives Committee on Environment and
Conservation (established in June 1982) which took over 3000 pages of evidence, the HORSCAN
issued its report (HORSCAN, 1985) with 31 recommendations. When the Government tabled its
response in Parliament on 11 September 1990 (a week before the release of the third runway
environmental impact statement (EIS); FAC, 1990), 25 of these recommendations had been ac-
cepted or implemented. Significantly, compensation for the reduction in property value to owners
brought about by the redevelopment of an existing airport (or the development of a new one) was
not pursued because of the complexities of calculating the extent of compensation, the uncertain
but possibly extensive cost across the whole range of infrastructure provision, and the possibility
of windfall gains to those being compensated. When the Commonwealth Government determined
that the third runway at Sydney KSA be built and operated, one of the conditions of development
consent was that noise and air quality management plans be formulated. In implementing these
plans, late in 1994, the Government agreed for the first time at any Australian airport, and after
nearly a quarter of a century after HORSCAN, that compensation schemes for residential
property owners and institutions be introduced.
Table 9
Annual practical capacity versus actual movements (including general aviation) at Sydney KSA (100s) a
1990 1991 1992 1993 1994 1995 1996 1997 1998 2003
Practical capacity 2680 2680 2680 2680 2680 3530 3530 3530 3530 3530
Actual movements 1580 1850 2030 2220 2270 2420 2560 2640 2640 3300
a Source: Various, including DTRD (1998a), BTCE (1994), Mitchell McCotter (1994b, p. 2.9, Table 2.1). Projections for
the year 2003 from the LTOP (1996) assuming 4.1% increase per year.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 441
More specifically, in order to address the externality problem at Sydney KSA, an EIS was
commissioned by the FAC, which subsequently satisfied Federal Commonwealth environmental
legislation. Construction of the third runway was approved subject to recommendations aimed at
finding ways to reduce the unhealthy and socially disruptive impacts upon the residents and
environment of Sydney. These recommendations have been detailed in the Draft Noise Man-
agement Plan and the Draft Air Quality Management Plan (Mitchell McCotter, 1994a,b,c,d).
Following the recommendation of the Draft Noise Management Plan, the Australian Federal
Government adopted a Final Noise Management Plan (1996), not released to the public, which
combines: (a) a list of measures to alleviate the noise problem in line with a traditional direct
regulatory approach (‘command-and-control’) and (b) the formulation of a noise levy on aircraft
in order to raise the money for these measures. In contrast to the direct approach, the second type
of instrument is more market-oriented. We discuss both approaches in turn.
4.2. Direct regulatory approach (‘command-and-control’)
The ‘command-and-control’ approach involves the setting of technical and environmental
standards enforced via legislation without the aid of market-based incentives. This has been so far
the traditional and preferred approach adopted by airports and regulators when dealing with
noise-related issues. For example, prior to the construction of the third runway at Sydney KSA,
the Australian Government implemented the gradual phasing-out of Chapter 2 aircraft to be
completed in a seven-year period from January 1995 to April 2002. In addition to this mandatory
measure towards noise reduction, the Australian Government determined new measures specific
to the Sydney KSA capacity expansion and its noise-related problem. The principal new reso-
lutions chosen to be a part of the noise mitigation policy can be described as operational measures
and administrative measures. The operational measures include:
• specific noise abatement procedures for aircraft operations and airport ground operations (e.g.,
preferential runway use system, preferential flight track use); operating restrictions and slot al-
locations (essentially, a limit on both the number and type of aircraft for domestic and inter-
national operations during curfew time (11 pm–6 am));
• further control of land use near Sydney KSA;
• voluntary acquisition of residences within a 40 Australian Noise Exposure Forecast (ANEF)
unit contour;
• sound insulation for residences, schools, child care and health care facilities within specified
noise contours;
• construction of an acoustical barrier in the form of a landscape mound to attenuate noise from
taxiing aircraft and engine ground running.
On the other hand, the administrative measures consist of reporting of ground running oper-
ations, upgrading of the noise monitoring network, and of procedures for handling complaints
(now the responsibility of AirServices Australia, not the Sydney Airport Corporation); amending
building codes; and information by local councils on eligibility for acquisition or insulation.
The Draft Noise Management Plan estimated that the cost of implementing all the ameliorative
measures would average approximately Aus$ 13 million per annum for a period of 10 years
(Mitchell McCotter, 1994b). After the initial period of 10 years, only administrative costs (esti-
mated at more than Aus$ 500,000) would be incurred. In other words, the large expenditures
442 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
related to voluntary acquisition and acoustic treatment of residences would be spread out over a
period of 10 years. Finally, after the election of the Liberal–National Party Commonwealth
Government in March 1996 (after 13 years of a Federal Labor Government), the insulation
package has been expanded to Aus$ 300 million, of which Aus$ 203.5 million has been spent from
1995 to 1998 (see Table 10).
4.3. Market-based (economic) incentives approach
Economic e?ciency suggests that the polluter (in this case, airlines and indirectly individuals)
should pay the full cost of environmental damage and nuisances caused by its activity (Turner
et al., 1994). According to the theory, this would create an incentive for the reduction of such
damage, at least to the level where the marginal cost of environmental damage (and nuisance)
abatement is equal to the marginal cost of the damage (i.e., the traditional Pigouvian solution). In
other words, the charge is viewed as an economic instrument that ensures that the price of air
services more fully reflects its total cost of production (including the costs of all the resources
used). Governmental intervention is sought to rectify a market failure by making polluters
‘internalize’thecostofuseordegradationofenvironmentalresourcesandlossofwelfare(nuisance,
etc.).
Following the recommendation of the Draft Noise Management Plan (Mitchell McCotter,
1994a,b), the Federal Commonwealth Government has adopted user charges following the
Polluter Pays Principle on the aviation industry.
10
While the main aim of a standard Pigouvian
tax is economic e?ciency (i.e., optimal levels of production and consumption), the main objective
of the Polluter Pays Principle, as formulated by the Organisation for Economic Cooperation and
Development (OECD) in 1972, is equity: ‘‘the polluter should bear the cost of measures to reduce
pollution decided upon by public authorities to ensure that the environment is an acceptable
Table 10
Evolution of revenue collected from aircraft operators and expenditure for noise mitigation scheme (in million of Aus$),
fiscal year ending in June a
Expenditure, Aus$ (Mio) Revenue, Aus$ (Mio)
1994–1995 24.2 –
1995–1996 62.3 22.1
1996–1997 49.0 38.7
1997–1998 68.4 39.4
a Source: Personal communication with senior o?cer (Harry Carroll) at AirServices Australia and DTRD (1998b).
10
Legislation to implement the noise charge was introduced early in 1995, and became e?ective 1 July 1995 (Aircraft
Noise Levy Act 1995). It is important to stress that under the Aircraft Noise Levy Collection Act 1995, Sydney KSA is
the only ‘qualifying airport’ in Australia. Two conditions are required to be a qualifying airport at a particular time: (a)
at the time there is a public building within a 25-unit contour, or a residence within a 30-unit contour shown on an
ANEF previously prepared for the area around the airport for a date after that time and (b) the Commonwealth is
funding at that time, or has funded before that time, a noise amelioration program for the airport. Note that once an
airport has become a qualifying airport, it remains a qualifying airport even if it no longer meets condition (a) (see Art.
6.5).
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 443
state’’ (quoted in Wallart, 1999). Since the empirical estimation of the environmental and financial
impact due to airlines’ operations is a far from exact procedure, most governments, aviation and/
or airport authorities rely on an ad hoc formula to apply the Polluter Pays Principle.
11
In general,
regulatory authorities follow the principles recommended by the International Civil Aviation
Organization (ICAO) when setting environmental (mostly noise-related) levies. The ICAO policy
on environmental levies recommends that any environmental levies on air transport which states
may introduce should be in the form of charges rather than taxes, and that the funds collected
should be exclusively applied towards mitigating the environmental impacts associated with air
transport activity (‘‘no fiscal aims behind the charges’’) (ICAO, 1998a). More specifically, with
respect to noise-related charges, ICAO recommends that the following principles should be ap-
plied (ICAO, 1998b, Appendix A):
• Noise-related charges should be levied only at airports experiencing noise problems and should
be designed to recover no more than the costs applied to their alleviation or prevention (charges
should relate to costs).
• Any noise-related charges should be associated with the landing fee, possibly by means of sur-
charges or rebates, and should take into account the noise certification provisions of Annex 16
(ICAO, 1993) in respect of aircraft noise levels.
• Noise-related charges should be non-discriminatory between users and not be established at
such levels as to be prohibitively high for the operation of certain aircraft. In addition, the
charges should not discriminate against air transport compared with other modes of transport.
Moreover, industry trade associations like the International Air Transport Association
(IATA), Association of European Airlines (AEA), and Airport Council International (ACI)
consider that noise classifications, and therefore noise-related charges, should be based on cer-
tifications values. This will ensure the transparency and the predictability of the markets for the
airline industry. In addition, because operational and environmental circumstances in di?erent
parts of the world, and between di?erent airports in the same region, di?er considerably, ICAO
considers that a diversity of approaches to such regional/local problems is inevitable, and that its
harmonized framework allows such di?erent approaches to develop. It is therefore instructive to
describe the noise levy charging approach in our case study of Sydney KSA.
5. Description of the noise levy charge at Sydney KSA
The general principle of the Sydney KSA aircraft NLC is that it is calculated so that it could
generate su?cient funding for the noise mitigation program. In order to achieve this goal, the
Draft Noise Management Plan (Mitchell McCotter, 1994b) devised a noise levy formula that
applies to landings by jet aircraft. The NLC is calculated in the following way:
NLC ? LUR ? 2 ?ANL?265?=15 ; ?1?
11
User charges are usually set lower than pure Pigouvian taxes, resulting in a higher level of externality, all else equal.
Wallart (1999) shows that a suboptimal user charge level can result in the optimal pollution level, provided that its
revenue is used for abatement spending, and that the user charge level is set adequately.
444 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
where LUR is the levy unit rate, i.e., the monetary value of one unit of noise, the number of noise
units (NU) is 2 ?ANL?265?=15 , and ANL is the assessed noise level measured in e?ective perceived
noise decibels (EPNdB), and calculated as follows:
• For a jet aircraft of a type which has been certified or measured as Chapter 2 (according to Vol-
ume 1 of Annex 16, ICAO, 1993), the ANL is the sum of the take-o?, side-line, and approach
reference noise measurement points (ICAO certification noise levels), plus 3.2 EPNdB in order
to make side-line measurements compatible with those of Chapter 3 aircraft.
• For Chapter 3 aircraft, the ANL is the sum of the take-o?, side-line, and approach reference
noise measurement points expressed in EPNdB.
As an example, the ANL for a Boeing 737-200 certified as a Chapter 2 aircraft is equal to 305.3
EPNdB (96.9 for the take-o?, 99.9 for the side-line, 105.3 for the approach noise levels, plus 3.2
for the correction), so that the NU of a Boeing 737-200 Chapter 2 aircraft is equal to 6.44. From
an operational point of view, the NLC is based on the forecast of number of landings expected for
each aircraft type in a given year. The expected total number of NU from all landings is com-
puted. The LUR for that year would then be equal to the total funds to be generated, divided by
the total number of NU for that year.
12
Given the requirement of the fund program, the LUR has
been initially set to Aus$ 155.00 for the fiscal year 1995–1996 (ending in June). As of July 1998, the
LUR was set at Aus$ 165.18, i.e., a nominal increase of 6.6% throughout the 1995–1998 period
13
(see Table 11).
Table 12 clearly shows that noisier aircraft pay more, all else being equal.
14
The di?erence in
the NLC between the B-737-200 and the B-737-400 is quite striking. The levy for the B-737
Chapter 2 version is three times larger than the levy for the Chapter 3 version. There are also
important di?erences on a per passenger basis and, to a lesser extent, depending on the seating
configuration of aircraft. According to Table 12, the di?erence between a Chapter 2 aircraft and a
Chapter 3 aircraft in the charge per passenger is larger for smaller airplanes. Indeed, the charge
per passenger for a B-747 or a DC-10 does not vary noticeably according to its Chapter certifi-
cation. However, for aircraft in the range of 65–165 passengers, the charge per passenger is sig-
nificantly larger for Chapter 2 aircraft. For example, for a similar capacity range, an F-28 has a
charge of around Aus$ 8.50 per passenger, in comparison to around Aus$ 2.00 for a BA-146.
Given this result, one could argue that there is a strong economic incentive for airlines to
12
Assume, for example that 100,000 landings are expected for a particular year, and that 10,000 of these landings are
performed by a Boeing 737-200 Chapter 2 aircraft (which displays 305.3 ANL), while 90,000 landings are performed by
a Boeing 737-400 Chapter 3 aircraft which displays 279.6 ANL (see Table 12 for details on the noise metrics). The total
number of NU corresponds to ?10,000 ? 6:44? ? ?90,000 ? 1:96? ? 240,800. If the total funds to be generated for a
particular year are Aus$ 40 million, the LUR (i.e., the $ value of one NU) would be equal to Aus$ 166.10, so that a
Boeing 737-200 would pay an NLC equal to Aus$ 1070.00, while a Boeing 737-400 aircraft would pay an NLC equal to
Aus$ 326.00 per landing.
13
The Aircraft Noise Levy Act 1995 provides that, for the financial year ending June 1996, the LUR should be less
than Aus$ 180.00, with a maximal increase of 10% for the following year.
14
At Sydney KSA, general landing charges and terminal charges are based on the maximum take-o? weight (mtow)
specified by aircraft manufacturers. The former amount to Aus$ 5.70 per ton, while the latter amount to about Aus$
2.40 per ton. Large aircraft like B-747 have an mtow ranging from 350 to 400 tons, while small aircraft like F-28 or BA-
146 have an mtow ranging from 30 to 40 tons.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 445
phase-out smaller Chapter 2 aircraft first and/or to operate those aircraft in other city-pairs. We
will come back to some of these issues in Section 6.
5.1. Properties and advantages of the NLC scheme
According to the OECD (1991) guidelines for the application of economic incentive instru-
ments, there are a number of general criteria against which the various instruments can be nor-
mally evaluated. These criteria are: the environmental e?ectiveness principle, the equity principle,
the (static and dynamic) economic e?ciency principle, the administrative cost-e?ectiveness princi-
ple, and the acceptability principle. We examine them critically with respect to the NLC at Sydney
KSA. In practice, these principles often conflict with each other, forcing the adoption of com-
promises and/or of innovative solutions.
Table 11
Evolution of the LUR at Sydney KSA a
1 October 1995 Aus$ 155.00
1 July 1996 Aus$ 162.12
1 July 1997 Aus$ 165.35
1 July 1998 Aus$ 165.18
a Source: Personal communication with senior o?cer (Harry Carroll) at AirServices Australia.
Table 12
Most common aircraft types operating at Sydney KSA, noise measures (EPNdB) and corresponding NLCs, 1998 a
Aircraft type Chapt.
cert.
Take-o?
(flyover)
Side-line
(lateral)
Approach ANL NLC
(Aus$)
Pax
(Max–Min)
NLC/Pax
(Aus$)
B-747-200 2 105.5 95.6 107.3 311.6 b 1423.00 569–374 2.50–3.80
B-747-200 3 101.1 98.5 106.0 305.6 1078.00 569–374 1.89–2.88
B-747-400 3 99.8 98.2 103.8 301.8 905.00 592–496 1.53–1.82
DC-10-30 3 103.0 98.0 106.6 307.6 1183.00 290–237 4.08–4.99
DC-10-30 2 101.8 101.0 106.3 312.3 b 1490.00 290–237 5.14–6.29
MD-11 3 95.8 96.1 104.4 296.3 702.00 400–250 1.76–2.81
A-300-203 3 94.0 96.9 102.4 293.3 611.00 375–220 1.63–2.78
A-310-304 3 92.9 96.1 98.8 287.8 474.00 280–218 1.69–2.17
A-320-211 3 87.8 94.3 96.4 278.5 308.00 179–164 1.72–1.88
B-767-300 3 92.2 99.0 100.2 291.4 560.00 325–218 1.72–2.57
B-737-200 2 96.9 99.9 105.3 305.3 b 1064.00 132–108 8.06–9.85
B-737-400 3 87.7 91.7 100.2 279.6 324.00 168–146 1.93–2.22
DC-9-30 2 97.8 102.0 101.9 304.9 b 1054.00 139–110 7.58–9.58
F-28 2 90.0 99.5 101.8 294.5 b 646.00 85–65 7.60–9.94
BA-146-100 3 81.8 87.7 95.6 265.1 166.00 88–64 1.89–2.59
DHC-8-201 3 80.5 85.6 94.8 260.9 0.00 36–32 –
a Source: Noise measures are reported from Advisory Circular AC36-1G (http://www.aee.faa.gov/aee-100/aee-110/AC/
AC_all.htm) for specific engine types and maximum take-o? weight.
b To obtain the ANL, 3.2 EPNdB have to be added in order to make measurements compatible with those of Chapter 3
aircraft.
446 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
The principal features of the NLC formula (see Eq. (1)) are the following:
1. Noisier aircraft pay more. The NLC is designed so that the marginal rate of the levy increases
as the ANL increases.
15
This is a desirable property because of the non-linear relationship be-
tween the noise metric (e.g., decibels) and the external costs associated with that noise level.
Indeed, every 10 EPNdB reduction corresponds roughly to halving the noise level. An ANL
of 270 would produce an NLC equal to 1:26 ? LUR, while an ANL of 320 would produce
an NLC approximately 10 times larger.
2. The NLC formula describes a continuous relationship between the NU and the ANL. Formu-
lae describing a discrete relationship between the NU and the ANL are sometimes proposed for
noise-related charges. Indeed, in some cases the charge is simply based on some (discrete) noise
level classifications, so that the relationship between the NU and the ANL is described by a step
function. One such example is to treat all Chapter 3 aircraft similarly, so that a flat noise levy
would be applied to any Chapter 3 aircraft, independently of its absolute noise level.
16
The rel-
ative merits of discrete versus continuous classifications have also to do with communication
aspects and data management; consequences for manufacturers who could be asked to margin-
ally modify some aircraft/engines in order to gain a fraction of decibel if there is a harmonized
discrete classification.
3. The NLC is designed so that if the ANL is less than 265 EPNdB, the NLC will be equal to 0. In
other words, only jets which have a noise signature higher than 265 EPNdB will be subject to
the noise levy. This threshold level is clearly arbitrary. This value adopted at Sydney KSA does
not imply airport neighbours would not hear such an aircraft.
4. The NLC is conceptually simple to understand and easy to compute once forecasts of aircraft
movements and aircraft noise parameters are available. Other aircraft characteristics like
weight, number of engines, aircraft size, etc., are not directly taken into consideration in the
formula, although there might be an engineering relationship between noise and aircraft char-
acteristics. Because of the relatively low information requirements and low administrative
costs, it is fair to say that the NLC satisfies the administrative cost-e?ectiveness principle.
5. The NLC is in line with ICAO recommendations in terms of environmental charges (see
Section 4.3) since it is related to the quantity of noise damage as well as to the recovery
of noise mitigation costs. All in all, it can be argued that the NLC fulfils the acceptability
principle.
Since the NLC is, in principle, able to mitigate the noise impacts associated with aircraft op-
erations, the NLC fulfils the environmental e?ectiveness principle. Similarly, the equity principle
seems observed since the NLC does not confer a disproportionate burden on the least well-o?
aircraft operators and/or aircraft users (passengers) (see Table 12). Whether the current NLC is
(su?ciently) e?cient in providing continuous incentives for noise nuisance reductions is rather
di?cult to answer, given, inter alia, financial, technological and operational constraints (see also
Sections 6 and 7).
15
Mathematically we have that oNLC=oANL > 0, and that o 2 NLC=?oANL? 2 > 0.
16
Since there is a lot of variability within a given certification category, some countries like France or South Korea
have adopted a more refined classification based on five groups of aircraft noise type (basically three groups for Chapter
3 aircraft, and two groups for Chapter 2 aircraft).
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 447
5.2. Potential limitations of the NLC scheme
We see, however, several limitations with the current NLC scheme. The most significant issue is
that the level of the noise levy is set by the sum needed to fund compensation and not by the
marginal cost that noise nuisances impose on society.
17
However, from an economic e?ciency
point of view, a noise levy should reflect the true marginal costs created by the externality, as well
as the marginal abatement costs (which depend on the technology available for, e.g., engine
hushkits, windows insulation, etc.). Because the sum needed to fund compensation is set to vary
each year (and eventually it is set to tend towards 0 after a period of 10 years), while the true
marginal costs are likely to be more steady, the divergence from marginal cost pricing could be
substantial in the medium/long run.
Second, the 265 (EPNdB) ANL threshold level is arbitrary, and does not imply that only
aircraft with an ANL greater than 265 induce noise environmental damages. Noise levy exempt
aircraft like the MD-90-30 (with an ANL equivalent to 260), the Saab 2000, the Fokker 50, and
some versions of the BAe146, are not exactly ‘silent’ aircraft, and therefore also induce negative
externalities. Similarly, the NLC does not apply to propeller aircraft or to helicopters. In de-
signing the formula there was a strong desire to ‘‘achieve a degree of comparability between the
total funds raised from international and domestic/commuter operations’’ (FAC, 1990, p. 9.6).
Indeed, because domestic operations at Sydney KSA strongly outweigh international opera-
tions,
18
and because domestic and regional operations use smaller aircraft than international
operations, there was a concern that the burden of the noise levy would proportionally be more
important on domestic markets, unless small jet aircraft would be less heavily taxed, or completely
exempt. Clearly, from an economic e?ciency point of view it is fair that quieter aircraft should be
taxed less. Whether it is desirable from an equity point of view that larger noisier aircraft are
heavily taxed (surcharge) while the smaller quieter aircraft are noise levy exempt (some sort of
rebate) is debatable. One can argue that this scheme provides some incentive for aircraft sub-
stitution. However, we believe that this substitution is rather limited, because the more noise-
e?cient aircraft can have very di?erent operational characteristics (i.e., size, range, etc.) than the
less noise-e?cient aircraft.
Third, the charge is based on the landing of an aircraft rather than a landing and take-o?
cycle. The charge is not contingent on the flight path of the aircraft during its landing and
take-o? operations. In a multiple runways airport such as at Sydney KSA, the areas which are
impacted by departures and by arrivals are often distinct from each other, with di?erent
consequences for populations and therefore di?erent external costs. In the case of Sydney,
operations over the south of the airport (over the water of Botany Bay) are much less dis-
ruptive than operations over the north or the east where residences are clustered. Weather
conditions permitting, an airline that has aircraft scheduled to/from the north would prefer to
take-o? (and/or land) from (to) the north, since any other option would amount to increasing
the circuity of the trip, and therefore to increasing its costs. Airlines that favour a greater
17
It is therefore not a standard Pigouvian tax.
18
107,000 domestic flights, 94,000 regional flights, plus 21,000 general aviation and military flights, versus 43,000
international movements for the fiscal year 1996–1997.
448 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
operational flexibility in terms of runway usage should also bear the cost of flying over more
noise-sensitive areas.
The NLC is not modulated in function of the time of the noise occurrence. Operations at night-
time (early morning and late evening), and during the weekends induce higher (marginal) costs to
society, all else equal.
19
Several European airports have introduced noise-related charges that are
modulated in function of the time (for example, Paris, Amsterdam, etc.). Similarly, because of the
emergence of some hubbing operations at Sydney KSA, peak period cluster scheduling (banks of
flights) has considerably increased (DTRD, 1997b). Because a concentration of operations during
a given period of time, usually around the peak morning hours (6–8 am) and around the peak
evening hours (6–8 pm), exacerbates the noise problem, these operations induce higher (marginal)
nuisances to society, all else equal.
20
Moreover, peak tra?c requires parallel runway operations
for greatest e?ciency and more noise-a?ected residents live to the north of the airport (see
Section 7).
The long-run problem of aircraft noise externality is not addressed by the current Noise Levy
Charge Act 1995. What will happen when the fund compensation requirement is nil (approxi-
mately 10 years after the phase-in of the NLC, i.e., by 2005) is not clear at the present stage.
Similarly, no formal noise quota has been formulated for the future, so that the absolute level of
externality is bound to follow the number of aircraft movements, all else equal. Some European
airports, e.g., Amsterdam and London airports, have addressed the long-run problem by im-
plementing both an NLC and a noise quota (cap) on aircraft operations. Additionally, and
contrary to the countries of the European Union, there is no specific agenda by Australian au-
thorities for setting more stringent noise certification standards based on state-of-the-art aviation
technology.
21
Finally, Sydney KSA is, so far, the only airport in Australia to face the NLC. Because airlines
operate on a spatial network, there is a need for cooperation among the di?erent airports in the
country, and maybe harmonization of the levy (at the national and sometimes international level).
Otherwise, there is a potential for introducing discriminatory measures that distort competition
and resource allocation. In fact, one potential operational e?ect of a locally based NLC is for an
airline to divert its noisiest aircraft to other routes of its network where the noise restrictions are
less stringent and/or where the financial penalty is more accommodating. Note that from an
economic point of view such an outcome could be acceptable if the external costs related to
19
This is especially important in Sydney given its climate which is suitable for outdoor and backyard activities.
20
Extensive hubbing is likely to increase both the number of noise events and the variability of the loudness of single
events. In an empirical paper, Levesque (1994) finds that a constant background level of noise seems more detrimental
than one in which there is more variability. See also Gillen and Levesque (1994).
21
Indeed, there are already concerns that once airline fleets are completely Chapter 3 certified (i.e., by 2002 in most
developed countries) and anticipated future growth in aircraft movements materializes, new standards must be devised
and implemented in order to curb total noise levels. So far, however, ICAO and its Committee on Aviation
Environmental Protection (CAEP), although recognizing that new noise certification standards need to be developed
that properly take account of technological progress, are unable to reach a consensus on any specific proposal to
introduce a new noise standard (ICAO, 1998c).
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 449
aircraft operations are lower elsewhere, a situation that could potentially arise in Australia (see
Table 8).
6. Impacts on aircraft operators and on passengers
Major Australian airlines (Qantas and Ansett) have upgraded and expanded their fleets during
the 1990s, and today their fleets, by and large, comply with the highest noise standards (although
Ansett still operated three (Chapter 2) F-28 in June 1998, see Table 13). The mandatory phase-out
of Chapter 2 aircraft coupled, to a lesser extent, with a higher NLC for Chapter 2 aircraft, has
induced Australian airlines to rapidly withdraw Chapter 2 aircraft from Sydney. Because the NLC
per passenger is significantly larger for smaller Chapter 2 aircraft, mainly F-28 and B-727, there
has certainly been a stronger incentive to phase-out these particular types of aircraft. However, we
strongly believe that the main force driving the withdrawal of some Chapter 2 aircraft is the
compliance with federal and international laws and the completion of the aircraft life cycle, rather
than the additional NLC. Industry sources suggest the e?ect has been the withdrawal on one
aircraft type, namely the F-28.
For aircraft operators, the direct e?ect of the NLC is an increase in airport-related charges (part
of the operating costs), and therefore a monetary transfer to the airport or the government au-
thorities. Because both domestic and international Australian airline markets are highly duopo-
listic, and demand for air transportation is fairly inelastic, airlines are more likely to (directly) pass
a substantial fraction of the NLC on passengers. In fact, a noise charge of Aus$ 3.40 per passenger
is automatically being imposed by individual airlines at their discretion to recover the costs they
incur in paying the NLC at Sydney KSA (FAC, 1996). This charge applies to every domestic/
regional and international passenger landing at Sydney KSA. With more than 10 million pas-
sengers inbound to Sydney KSA in 1996–1997 (for about 122,000 aircraft movements), some
Table 13
Major Australian airline fleets (including regional subsidiaries), June 1998 a
Aircraft type Qantas Ansett
B-747 b 31 3
B-767 b 26 13
B-737 b 38 22
A-300 b 4 –
A-320 b – 19
BAe146 b 14 11
F-28 b – 3
DHC-8 b 16 –
DHC-6 b 5 –
BA-JS31 4 –
Shorts SD360 7 –
Cessna C404 Titan 2 –
Total 147 71
a Source: Airlines’ annual reports, 1998.
b All types included.
450 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
Aus$ 35 million have been collected from passengers, while the NLC paid by the airlines has
generated revenues of Aus$ 38.7 million for the noise mitigation fund
22
(see Table 10). These
results suggest the following remarks: first, airlines have been able to, by and large, directly pass
the NLC on travellers as an increase in fares.
23
Second, there can be important cross-subsidi-
zation within passengers Sydney KSA-bound. Indeed, Table 12 indicates that, depending on the
seating configuration, actual NLC per passenger varies from nil for the ‘quietest’ small turboprop
(jet) aircraft to approximately Aus$ 10.0 for the noisiest aircraft.
We see that the NLC a?ects both airlines and its customers. Since it is the latter who mainly
receive the benefits of air transportation,
24
the fact that passengers bear a large share of the social
costs associated with this mode of transportation could be acceptable. However, when airlines
increase fares as a result of the NLC, they also incur a negative demand e?ect since demand is
expected to fall. The exact amount by which demand will fall depends on several factors, in
particular, on the price elasticity of demand for air travel. Because international, domestic/re-
gional airline markets have di?erent characteristics (e.g., distance, trip purpose, income), price
elasticities usually vary for each type of market. Bearing in mind that price elasticities are higher
(in absolute value) for leisure tra?c than for business tra?c, price elasticities for international
airline markets to Australia have been recently estimated to vary between 0.5 and 2.0 (BTCE,
1995b). Similarly, price elasticities for domestic/regional routes range from 0.3 for the principally
business-oriented routes to 2.3 for the largely leisure-oriented routes (Mitchell McCotter, 1994b).
Considering a ‘representative’ round-trip air fare of about Aus$ 1500 and Aus$ 500 for in-
ternational and domestic markets, respectively, we can provide an estimate of the reduction in
demand from the prevailing Aus$ 3.40 increase in air fare associated with the NLC. The 0.227%
increase in international fares induces a reduction of demand of approximately 0.113–0.453%
depending on whether the trip is mainly leisure-oriented or business-oriented. Similarly, the 0.68%
increase in domestic fares is likely to produce a reduction of demand of around 0.204–1.564%
according to the type of market. This result suggests that about 7500–30,300 international pas-
sengers
25
could decide not to fly to Sydney KSA (some of these passengers would be diverted to
other destinations within Australia, e.g., Brisbane, while others would choose not to fly, or to fly
to another country). Similarly, about 28,500–219,000 domestic passengers
26
could forgo their trip
to Sydney. Given that an average international flight at Sydney KSA carries some 157 passengers,
while a (weighted) average domestic/regional flight carries 104 passengers, we have that about 48–
193 international flights, and about 274–2105 domestic/regional flights might not be annually
scheduled at Sydney KSA as a result of the NLC. In the total, around 322–2298 flight movements
could be annually diverted from Sydney KSA (between 0.132% and 0.943% of actual movements).
Although these e?ects are small, and other factors like exchange rates, avgas price, and domestic
and international economic growth are more likely to influence the future trend of the air
22
Similar figures apply for the latest fiscal year 1997–1998.
23
Notice that, in some cases, an airline operating the ‘quietest’ aircraft (e.g., an overseas airline which operates a B-
747-400 aircraft) could theoretically end up raising more revenues from noise charges than actual payment for the NLC.
24
Profit figures indicate that major Australian airlines have, so far, not been able to reap extra competitive profits
despite the oligopolistic industry structure.
25
Based on an estimate of 6.7 million international passengers in 1997.
26
Based on an estimate of 14 million domestic passengers in 1997.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 451
transport demand at Sydney KSA, our analysis indicates that depending on the price elasticities
estimates, and on the amount of the NLC, the total number of aircraft movements might be
curbed at Sydney KSA under a regime of NLC.
Table 14 summarizes the likely impacts on demand and on aircraft movements, had airlines
imposed a per passenger noise charge of Aus$ 6.80 or Aus$ 10.20 instead of Aus$ 3.40. Such an
increase in the noise charge would have occurred had the actual LUR been set higher, as sug-
gested by some local community advocates.
27
The results of Table 14 suggest that, when the price
elasticity is valued at its high range, a reduction of around 3% of annual aircraft movements could
arise under a per passenger noise charge of Aus$ 10.20. All in all, these results show that the
airline industry indirectly bears some of the social costs associated with this mode of transpor-
tation in the form of a loss of potential passenger revenues. Similarly, some airport-related
charges are forgone for Sydney KSA.
7. Impacts and distributional consequences of aircraft noise
7.1. Before the long-term operating plan of March 1996
Given aircraft types and aircraft noise characteristics, the allocation of aircraft to flight paths
28
ultimately determines the noise exposure of residents surrounding the airport. With the opening of
the third runway (16L-34R), air tra?c management had more flight path options (diversification
argument) available with Sydney’s airspace. However, the former Labor Government in its de-
termination on the third runway EIS imposed an operational restriction that there would be no
take-o?s to the north from the new runway because of noise impacts on residents to the north. In
early 1995, the runways available at Sydney KSA were as follows (see Fig. 1):
• arrivals: 07-25, 16R-34L, and 16L-34R,
• departures: 07-25, 16R-34L, and 16L.
Table 14
A critical examination of an airport noise mitigation scheme 代寫
E?ects on demand and on aircraft movements from di?erent noise charges a
Type of market Reduction in demand from a per pax
charge of
Reduction in aircraft movement from a
per pax charge of
Aus$ 3.40 Aus$ 6.80 Aus$ 10.20 Aus$ 3.40 Aus$ 6.80 Aus$ 10.20
International 7500–
30,300
15,210–
60,770
22,780–
91,120
48–193 97–387 145–580
Domestic ? regional 28,500–
219,000
57,120–
437,920
85,680–
656,880
274–2105 549–4211 824–6316
Total 36,000–
249,300
72,330–
498,690
108,460–
748,000
322–2298 596–4598 969–6896
a Note: Calculations are based on price elasticities ranging from 0.5 to 2.0 and from 0.3 to 2.3, and on a ‘representative’
round-trip air fare of Aus$ 1500 and Aus$ 500, for international and domestic markets, respectively.
27
Indeed, they argued that a higher LUR would have raised additional revenue for the noise mitigation scheme, as
well as providing a stronger incentive to operate more noise-e?cient aircraft.
28
Which is the responsibility of air tra?c controllers of AirServices Australia.
452 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
In fact, both the EIS for the third runway and the Noise Management Plan were predicated on
parallel runway operations (16L-34R, 16R-34L) with the use of the East–West runway (07-25)
downgraded for use only when adverse weather conditions would pose safety problems for the
other runways (about 1% of all aircraft movements). The Civil Aviation Authority responsible for
air navigation services (now AirServices Australia) nominated the preferred runways and the
preferred flight paths as part of noise management procedures with the parallel runways such that,
on a long-term average between 6 am and 11 pm, 86% of aircraft would move in a southerly flow
direction (take-o?s over Botany Bay) and 13% would move in a northerly direction (Mitchell
McCotter, 1994b). During the curfew hours those aircraft permitted by legislation to operate
would both arrive and depart over the southerly Botany Bay. The Select Committee on Aircraft
Noise in Sydney (Commonwealth of Australia, 1995) illustrates operations both before (1993) and
after the opening of the third runway (1995) with four maps showing the spatial extent of the noise
exposure contour ANEI for 15 and above, separately for arriving and for departing aircraft.
There was a redistribution of aircraft noise away from the suburbs to the east and west of the
airport to those to the north (there is relatively little residential development under the flight paths
to the south of the airport). This was clearly demonstrated in the Draft EIS (Kinhill Engineers,
1990) by calculating the number of occupied private dwellings (low density, medium density, and
high density) within the 20 ANEF contour for the 1988 base case
29
and by simulating the 20
ANEF contour for the long-term scenario (2010) of parallel runway operations. Table 15 shows
that the total number of dwelling units within the 20 ANEF was predicted to fall by about a half
from 71,900 to 37,800 but that the number to the north of the airport would increase by some 44%
from 23,000 to 33,000.
Fig. 1. Sydney KSA runways system.
29
Using Census Collectors Districts data from the Australian Bureau of Statistics.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 453
As suggested by the predictions of Table 15, these changes in aircraft overflying residential
areas induced by parallel runway operations have significant implications for the redistribution of
wealth. Percentage depreciation in house prices was calculated for di?erent ANEF contours.
30
A critical examination of an airport noise mitigation scheme 代寫
Despite doubts about the reliability of the depreciation rates used,
31
the net loss in property value
resulting from noise increases is estimated to amount to some Aus$ 175.5 million in areas north of
the airport (Marrickville, Leichhardt, Ashfield, Drummoyne, Hunters Hill, Lane Cove, and
Ryde). Parts of those suburbs to the east and west of the airport – Botany, Randwick, Rockdale,
Kogarah, and Hurstville – obtained a net gain in value of some Aus$ 200 million from aircraft
noise reductions (Kinhill Engineers, 1990).
In February 1995, soon after operations on the third runway brought home the redistribution
of aircraft noise and after consultation with community groups, the Australian Democrats (the
third major political party in Australia) decided to push for a Senate inquiry into Sydney’s aircraft
noise problems. The press release by New South Wales Senator Vicki Bourne (28 February 1995)
said a public inquiry was essential given the ‘‘anger and distress’’ caused by the opening of the
third (parallel) runway. The Select Committee on Aircraft Noise in Sydney inquired, among other
matters, into: the human impact of noise caused by aircraft movements following the opening of
the third runway; reasons for discrepancies between the predicted and actual noise impacts (and
proposals to prevent any such discrepancies occurring in the future); the likely e?ectiveness of the
environmental management plans for Sydney KSA (and whether there are other potentially ef-
fective measures which could be implemented); and the potential for operations at the future
Table 15
Number of occupied private dwelling types in the 20 ANEF and above contours for the base case (1988) and the long-
term (2010) parallel runway operations a
Location relative to airport 1988 2010 Change (%)
North 23,158 33,398 +44.2
South 1071 1236 +15.4
East 23,384 1445 ?93.8
West 24,326 1683 ?93.1
Total 71,939 37,762 ?47.5
a Source: Based on Kinhill Engineers (1990, pp. 23–22, Table 23.9).
30
The rate of depreciation resulting from aircraft noise exposure was assumed to be the same for high rise dwellings as
estimated for detached and semi-detached houses valued in noise-a?ected parts of Marrickville, Rockdale, and Botany.
31
Although numerous empirical studies of the relationship between aircraft noise and property values have been
conducted (see, e.g., review by Feitelson et al., 1996), few in-depth studies have been conducted for Sydney KSA. The
most cited studies (Abelson, 1977; and the Draft EIS, Kinhill Engineers, 1990) used a hedonic pricing method to
identify the implicit price attached to di?erent variables by the house buyer. The Draft EIS study (1990) sampled 344
houses in Botany, Marrickville and Rockdale and compared prices in noise-a?ected areas with comparable prices that
were not noise-a?ected. The most recent study by JLW Research and Consultancy (Mitchell McCotter, 1994b,
Appendix J), sampled 750 property transactions in 1991 and 1992 along the north–south flight path and compared
prices with nearby non-noise-a?ected properties. Negative premiums (depreciation rates) in these latter two studies of
the northern suburbs reach up to 20% in the 35 ANEF contour.
454 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
Sydney West Airport (SWA) at Badgerys Creek
32
A critical examination of an airport noise mitigation scheme 代寫
to alleviate the impact of aircraft noise on
‘‘Sydney basin communities’’ (Commonwealth of Australia, 1995).
The Select Committee on Aircraft Noise in Sydney made comments critical of the environ-
mental assessment of the third runway, and made recommendations on the operational measures
implemented to reduce noise at Sydney KSA. One of the main recommendations was the intro-
duction of a legislative cap on annual movements at Sydney KSA, and 80 aircraft movements per
hour is now Government policy.
7.2. Since the long-term operating plan of 1996
On 2 March 1996, the Liberal/National coalition won the federal election (defeating the Labor
Party) with a landslide victory in the House of Representatives.
33
The Sydney Morning Herald,
on the day of the election, summed up what each party had to o?er on Sydney KSA and on the
future SWA at Badgerys Creek. The incoming Government’s election policy is reproduced in
Table 16.
In March 1996, the Federal Government launched its plan to reopen the East–West runway
(07–25). This would direct more aircraft over Labor seats to the east and west of the airport than
above the Liberal strongholds to the north of the airport. The plan was described by the Sydney
Morning Herald (23 March 1996) as reversing ‘‘the ‘politics of noise’ imposed by the former Labor
Government’’. Four councils (Botany, Hurstville, Randwick and Rockdale) applied, unsuccess-
fully, to the Federal Court to grant an injunction to stop the East–West runway from being re-
opened pending completion of an EIS.
The new Federal Minister for Transport, Mr. John Sharp, confirmed on 29 March 1996 with
AirServices Australia an interim plan to reopen the East–West runway in the first week of April
with its use in o?-peak periods, mostly by smaller aircraft (stage I of the long-term operating plan
(LTOP)). AirServices Australia was to report by 16 December 1996 on an LTOP for flight paths
and runway usage within the context of all three runways being available for jet and propeller
aircraft, and of maximum use being made of flight paths over water and non-residential land.
After a succession of gradual changes in operational procedures,
34
on 4 December 1997, stage II
of the LTOP for all three runways was implemented, thereby sharing the noise more equitably to
the north, east, south and west of the airport. That is, the Australian Federal Government di-
rected AirServices Australia to optimize runway selection, through di?erent operating modes, in
order to facilitate a fair distribution of noise consistent with safe and e?cient operations. The
opportunity for aircraft noise sharing mainly relies on (1) the rotation of runway use throughout
the day, and (2) the current 11 pm–6 am curfew arrangements, and an 80 movements per hour
cap. Clearly, the availability of diversified jet flight paths brought by the three runways system
facilitated the implementation of the noise sharing program under the LTOP.
35
32
See footnote 8.
33
In the Senate (Upper House), the Democrats with eight seats continued to hold the balance of power.
34
Complete details can be obtained at AirServices Australia’s web site at www.airservices.gov.au/news/newsfr.htm.
35
By the end of 1998, the runway modes of operations allowed for nine di?erent movement patterns. The preferred
runway selection by time of day (0600 to 0700; 0700 to 2300), Monday to Friday and Saturday and Sunday is set out in
the monthly report of Sydney airport operating statistics and is also available at AirServices Australia’s web site.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 455
The predicted noise impact on people is to reduce substantially the number of residents in the
ANEF contours above 30 from about 11,000 to 4000, but to increase by nearly 50% the numbers
in the ANEF 20–30 from 109,000 to 151,000 (AirServices Australia, 1997). The distribution of
aircraft movements as well as the distribution of the spatial pattern of the noise complaints over
suburbs in the vicinity of Sydney KSA has altered dramatically over the 1993–1998 period.
Clearly, the evolution of the number of noise complaints received by the Customer and Com-
munity Relations section of AirServices Australia is also strongly correlated with the runway
modes of operation, especially for those residents exposed to ‘new’ noise under the revised flight
paths. Monthly noise complaints jumped dramatically from a couple of hundred before the
opening of the third runway to about 6000 per month after its opening with parallel runway
operations in November 1994 (Commonwealth of Australia, 1995). Monthly complaints dropped
steadily to about 2000 before the introduction of stage I of the LTOP.
36
When the Common-
wealth Government reopened the East–West runway, monthly complaints climbed steeply to 6500
in July 1996 (stage I of the LTOP). Departures for the first time of runway 34R (see Fig. 1)
prompted 8000 complaints for the month of November 1996. Complaints fell rapidly, and by
November 1997 about 2500 monthly complaints were received. Implementation of stage II of the
LTOP in December 1997 pushed monthly complaints past 9000. Finally, the most recent data
(October 1998) indicate that the number of monthly complaints stabilized at about 3400 com-
plaints (from 612 complainants). Table 17 illustrates the distribution of aircraft movements ac-
Table 16
Liberal and National Parties coalition election policy on Sydney Basin airports a
Issue Policy
Noise The aim is to share the noise burden around all neighbouring suburbs
East–West runway Within 10 days of taking o?ce, the coalition would issue a direction to AirServices
Australia to begin work on reopening the East–West runway. The full length of the
runway is to be used by both jet and propeller aircraft, but all long-haul B-747 jets
are to continue to use the main North–South runway
Flight paths Abolish flight corridor regulations, allowing AirServices Australia to revert to flight
paths similar to those in use before the third runway was opened. Aircraft departing
to the south will continue to veer around the Kurnell Peninsula. Narrow flights
paths remain over Marrickville and Sydenham until the Iron Cove Bridge, where
planes will fan out to the west, but not east. Guarantees no suburb previously
una?ected by aircraft noise will be under its plan
Airport capacity Capped at a maximum of 80 movements an hour
SWA at Badgerys Creek Supports Badgerys Creek as Sydney’s second major airport, subject to result of a
genuine EIS. Has agreed that EIS should look at Badgerys’ suitability as Sydney’s
major airport. Willing to consider other sites if the EIS proves adverse
a Source: The Sydney Morning Herald, News Review (2 March 1996, p. 32).
36
A critical examination of an airport noise mitigation scheme 代寫
Complaints about aircraft noise are not always strongly correlated with noise exposure as shown in a survey of 3575
Australian residents (Hede and Bullen, 1982). Fear of aircraft crashing, personality, socio-economic status and media
focus are factors that influence whether annoyance from aircraft is reported.
456 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
cording to the cardinal points: (1) before the construction of the third runway (pre-parallels,
1993); (2) after the construction of the third runway under the Labor Government (parallels,
1995); (3) after the construction of the third runway under the coalition Government (stage I of
the LTOP, end of 1996); (4) stage II of the LTOP (June 1999); and finally (5) under the long-term
coalition Government’s target for the LTOP.
Although it is too early to provide a comprehensive economic, operational and environmental
assessment of the LTOP,
37
the concept of noise sharing through a safe and e?cient use of dif-
ferent operating modes of all runways is theoretically appealing. In fact, under specific circum-
stances there is a strong theoretical argument in favour of ‘externality distribution’. Assuming that
the marginal external cost (MEC) associated with aircraft noise is increasing
38
in the number of
aircraft movements per runway (N), it is easy to show that total external costs are lower when
aircraft movements are distributed over a larger number of runways. Let us consider the following
graphical example. Fig. 2 displays a linear (increasing) relationship between the number of aircraft
movements per runway and the MEC, i.e., MEC ? a ? b ? N, with aP0, and
39
b > 0. First,
assume that all the runways have identical characteristics, and that a total of 120 aircraft
movements (per time unit) are equally shared among two runways (a situation which would depict
the ‘parallels’ regime in 1995). Since total external costs correspond to twice the area under the
MEC of Fig. 2, it is easy to show that total external costs correspond to 3600 ? b. Now, let us
assume that the same total of 120 movements are equally shared among the three runways (a
situation which would rather represent the LTOP’s target). A straightforward computation shows
that total external costs are reduced to 2400 ? b, all else equal. In other words, when the MEC per
runway is rising, sharing the tra?c over more runways can be socially optimal. It is also inter-
esting to note that with three runways, tra?c would have to increase to some 147 movements (i.e.,
49 movements per runway) in order to achieve the same level of total external costs induced by
120 movements equally distributed over two runways.
Table 17
Distribution of aircraft movements over Sydney’s skies a
(1) (2) (3) (4) (5)
Pre-parallels
(1993)
Parallels
(1995)
Stage I-LTOP
(end 1996)
Stage II-LTOP
(June 1999)
LTOP
target
North 21% 47% 35% 24% 17%
East 16% 1% 12% 11% 13%
South 42% 51% 47% 52% 55%
West 21% 1% 6% 13% 15%
a Source: DTRD (1997a), Sydney Airport Operating Statistics (October 1998) and AirServices Australia (1999).
37
Such assessments were not called for by the Minister in the introduction of the LTOP. As already mentioned,
a?ected local councils in Sydney challenged this, unsuccessfully, in the High Court of Australia.
38
This is a standard assumption in environmental economics, and it is most likely to apply in the case at hand,
although it is ultimately an empirical question. The dramatic surge in the number of noise complaints after the opening
of the third runway supports the standard assumption of increasing MECs.
39
For simplicity’s sake, and without loss of generality, we can set a ? 0, as in Fig. 2.
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 457
Despite all the caveats of such a simplified model, this result suggests that, in some cases, the
typical trade-o? between capacity expansion and noise externality can be substantially reduced if
the capacity expansion is accompanied by an environmentally responsible and e?cient ground
and air tra?c management. Clearly, it is the number of noise-related complaints after the in-
troduction of the third runway that triggered the implementation of the LTOP. One could
question whether it should be the airport management or the politicians that should have the
initiative to design operational practices that optimize the trade-o?s between the needs of the
airport’s neighbours and those of the flying community. The fact that politicians should have the
legislative power to set NLCs is indisputable. However, when airport management’s mission on
e?ciency, security and community interest is clearly stated, decisions like runway scheduling and
selection, and hours and modes of operations should be decided by airport management (along
with the air tra?c services provider) without too much political interference. Otherwise, the risk
of disruptive e?ects on the airport’s neighbours and the flying community from future elections
could be significant.
8. Conclusions
In this paper, we analyse positive and normative issues about the Sydney KSA noise miti-
gation scheme and the aircraft noise charge related to its recent capacity expansion and its
growing externality problem. More specifically, we extensively describe the NLC at Sydney KSA
by focusing on its economic properties and advantages as well as its limitations. The NLC at
Sydney KSA derives from the Polluter Pays Principle, and is mainly used to finance insulation
Fig. 2. Rising MEC and optimal use of runways.
458 G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461
programs, and the acquisition of lands and buildings. Although the Aircraft Noise Levy Act
1995 provides an incentive to use more environmentally friendly aircraft, the application of the
Polluter Pays Principle as an economic instrument ensures only partial ‘internalization’ of
negative externalities related to aircraft operations. Indeed, social costs due to aircraft operations
also include, inter alia, aircraft emissions, water pollution, and road tra?c congestion around the
airport associated with ground access. Clearly, none of these elements are taken into account
under the current environmental mitigation program. However, several overseas airports (in
particular European airports such as Zurich Kloten and Amsterdam Schiphol) charge di?eren-
tiated levies for noise externality and air pollution. Because the correlation between aircraft noise
nuisances and aircraft emissions does not always perfectly match, there is a need for devising an
air pollution levy that is di?erentiated from the noise levy, if there is a desire to fully apply the
Polluter Pays Principle.
40
A critical examination of an airport noise mitigation scheme 代寫
In an ideal world, one would aim at comprehensively addressing (i.e., internalizing) the full
environmental costs as well as benefits associated with aircraft operations. Such an economic
‘first best’ would be rather di?cult to achieve given the complexity of the problem at hand
(uncertainties, multiple constraints, etc.). The Polluter Pays Principle applied in Sydney KSA
can be described as an ‘nth best’ given the di?erent constraints. To the best of our knowl-
edge, whether su?cient static and dynamic e?ciency (i.e., incentive to reduce aircraft noise
externalities) is achieved under the current scheme is di?cult to assess. Similarly, even if
e?ciency is achieved under the current scheme, local/regional economic optimality does not
necessary imply global optimality. The fact that the scheme chosen at Sydney KSA combines
‘user charges’ (i.e., the Polluter Pays Principle) and some degree of ‘internalization’ seems to
us appealing in the case at hand (i.e., in the very contentious and complex context of an
airport).
The main contribution and originality of this paper is the integration of the various aspects and
dynamics driving the economics of air transport in relation to airport infrastructure and opera-
tions and its associated environmental externalities. For a number of reasons (e.g., availability of
data, transparency, originality of the scheme, etc.) Sydney KSA provides a unique framework for
analysing this complex issue. On the other hand, by focusing on the specifics of Sydney KSA, we
are able to discuss broader principles and policy issues likely to be relevant for other major air-
ports around the world. As pointed out by the Select Senate Committee on Aircraft Noise in
Sydney (Commonwealth of Australia, 1995), the third runway was ‘an engineering triumph’ but a
‘social disaster’. We believe the balancing of economic and environmental impacts associated with
airport expansion will remain a challenge to policy makers in the next century, and our approach
is a starting point for such comprehensive and integrated approaches to planning and evaluation
of infrastructure.
40
It is interesting to note that the principle of an emission-related charge, although not yet fully endorsed by ICAO,
has recently gained some favourable ground among the international aviation community (ICAO, 1998c).
G. Nero, J.A. Black / Transportation Research Part D 5 (2000) 433–461 459
Acknowledgements
This research was conducted while Dr. Nero was a Visiting Fellow in the School of Civil and
Environmental Engineering at the University of New South Wales. Dr. Nero thanks the Swiss
National Science Foundation for financial support (Grant no. 8212-50417). Prof. Black chaired a
Community Advisory Committee at Sydney KSA from 1992 to 1994 associated with the for-
mulation of noise and air quality management plans for the airport’s third runway. The authors
benefitted greatly from discussion with Dr. Nicolas Wallart, and from the research assistance of
Heru Jatmika.
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