Insights on the Economic Estimates of the Climate Costs of the Aviation Sector Due to Air Management in 2018-19

Air navigation service providers ensure that aircrafts keep safely apart by prescribing vertical and horizontal distances to each other. In the European Union and its associated members, regulation is carried out via a performance scheme which measures and sets targets for the different key performance areas. For the environmental area, targets in terms of CO2 and other pollutants were set by assuming that there would be continuous improvements for the Key performance Environment indicator based on actual trajectory. However, although a higher Horizontal Flight Efficiency (HFE) measurement usually means a more direct flight trajectory, this does not necessarily translate into a climate optimal trajectory. Thus, vertical flight efficiency also needs to be considered. There is also an interdependency be¬tween airspace and Air Traffic Man¬agement Capacity and Environment: when the offered capacity falls short of the demand for flights, ground delays, holdings and traffic shifts to adjacent areas occur. This entails detours and a deterioration of the HFE-indicator. Results show that total climate costs for 2018 and 2019 may be as high as 1 bn EUR, of which about 34% is due to CO2 emissions. In particular, the climate costs of CO2 emissions due to capacity constraints range from 54 to 301 million EUR, depending on whether CO2 costs are measured in terms of avoidance costs or under the EU Emissions Trading System (EU ETS). Following the first criterion and the short to medium run up to 2030, the estimated costs would amount to 112 million EUR. In the long run, from 2040 to 2060, these costs would amount to 301 Million EUR. With the estimates of the EU ETS, the cost by 2030 would be close to 54 million EUR and 153.5 million EUR for the long run. Volatility of carbon pricing may play a very significant role, but fortunately can be hedged. Therefore, a shortfall of capacity leads to delay costs and considerable environmental costs. As capacity is planned in the medium to long-term, traffic forecasts are a crucial element. This means that further research is warranted into the interdependency of traffic forecasts, capacity and environmental costs. Keywords: climate economic cost, aviation sector, capacity management