AIR CARRIER INFRASTRUCTURE AND SECURITY COSTS SECOND TO ONLY FUEL AND
LABOR
Nashua, NH — January 17, 2008 — More than 15% of the expenses borne by
air carriers and their customers goes towards aviation infrastructure
— airport facilities, air traffic control services, and security. This
makes aviation infrastructure the third-largest cost category in the
industry, with fuel being first and labor second.
This
is one of the results published this week in a new study on aviation
infrastructure costs by Daniel Webster College and the Massachusetts
Institute of Technology (MIT) Global Airline Industry Program.
The
cost of aviation infrastructure and how to fund it have become the
focus of global attention. In the U.S., this discussion has become
part of the debate over future funding for the Federal Aviation
Administration (FAA). The argument over how best to fund the next
generation air traffic control system and badly needed airport
capacity involves airlines, airports, the federal government, and
operators of business jets and other small aircraft.
One
central problem in these debates is that information on aviation
infrastructure costs has been both incomplete and fragmented. Daniel
Webster College Professor Joakim Karlsson explains the difficulty of
measuring aviation infrastructure costs.
“While the airline industry reports costs on a regular basis, expenses
related to airports, air traffic control, and security are spread over
many cost categories. In addition, ticket taxes and fees, which
constitute the largest revenue source for aviation infrastructure, are
handled ‘off-budget’ and not included in airline financial
statements.”
The
federal government and local airports currently add four types of
taxes and fees to the basic cost of each domestic airline ticket.
Other fees are assessed on a per-flight basis or as an annual charge
against each airline. Separate taxes apply for international tickets,
air cargo shipments, and aviation fuel sales. These taxes and fees
comprise a significant portion of the costs of the air traffic control
and airport systems of the United States and, following September 11,
2001, the costs associated with passenger and baggage screening
conducted by the Transportation Security Administration (TSA).
According to the joint Daniel Webster College/MIT study, air carriers
and their customers paid $23 billion for aviation infrastructure in
2004, the year covered by the study, representing 15% of total
industry expenses. Of this amount, $14 billion, or 63% of total
infrastructure expenses, are paid through taxes and user fees.
The
project team’s analysis is based on data collected by the FAA,
Department of Homeland Security, Bureau of Transportation Statistics,
and the Air Transport Association of America. The team also conducted
a detailed cost survey covering ten U.S. carriers. The study covers
both passenger and cargo airlines, and includes domestic as well as
international infrastructure costs.
According to MIT Professor Amedeo Odoni, “Until now, conventional
wisdom had it that external infrastructure costs represent only a
small fraction of airline expenses — a 5-6% figure is typically
mentioned. This study paints a very different picture of the true
situation. Although infrastructure-related expenditures are large in
both absolute and relative terms, the lack of sufficient capacity and
the widespread congestion problems suggest that the expenditures may
still not be large enough and/or the funds are not being spent
effectively.”
Professor Karlsson describes the significance of the study’s results.
“We believe this is the first time aviation infrastructure costs have
been accounted for in a comprehensive way.”
Infrastructure costs cover a broad range of items, including landing
fees, passenger terminals, debt service for airport facilities,
security costs, and a number of taxes and fees paid to U.S. and
foreign government entities for aviation facilities and air traffic
control services.
The
team’s findings were presented in a paper delivered at the 87th
Annual Meeting of the Transportation Research Board of the National
Academies, January 13-17, 2008, in Washington, D.C.
The
study is available as a PDF document at:
http://faculty.dwc.edu/karlsson/KarlssonOdoniGaudetTRB2008.pdf
For
more information contact Professor Joakim Karlsson:
karlsson@dwc.edu,
office phone 603-577-6428 or home phone 603-673-2440; or Professor
Amedeo Odoni at
arodoni@mit.edu.
Founded in 1965, Daniel Webster College's undergraduate degree
programs in aviation — aviation flight operations, aviation management
and air traffic management — are highly regarded throughout the
industry, with all three majors accredited through the Aviation
Accreditation Board International (AABI)
Daniel Webster College is a Certificated Air Agency under the
guidelines of Part 141 of the Federal Aviation Regulations. All flight
instructors are FAA Certificated Flight Instructors. The program leads
to a Bachelor of Science degree and combines general academic
preparation and professional pilot education and is designed to
prepare students for employment as professional pilots and for
leadership roles in a variety of flight operations settings or for
matriculation in an appropriate master’s degree program.
Daniel Webster’s Air Traffic Management major is ranked first in the
North East and first as a private institution offering the Air Traffic
Management major and is one of only 23 academic programs recognized by
the FAA as part of its Collegiate Training Initiative (CTI).
Daniel Webster
College fulfills its mission by helping purposeful men and women
discover how to channel that purpose in their lives through blending
theory and practice from day one; and, in doing so, graduates leave
Daniel Webster “workforce ready” for entry and advancement in a
variety of highly relevant professions. Visit Daniel Webster College
at
www.dwc.edu.
Contact:
Joakim Karlsson
Associate Professor
Division of Aviation
Daniel Webster College
20 University Dr
Nashua, NH 03063-1300
Phone: 603-577-6428 [office]; 603-673-2440 [home]
http://faculty.dwc.edu/karlsson
karlsson@dwc.edu
