Research at BNU Assessing the impact of airport incentive schemes on regional air connectivity differentials across europe

DAVID WARNOCK-SMITH

This research represents the results of the widest audit to date of airport incentive schemes across Europe where, by using data from 2017-2020, incentive schemes for more than 400 commercial airports were listed and classified by incentive type. The top 5 categories were related to new routes, passenger growth, frequency and capacity initiatives, confidential agreements and airports with no incentives. The study also detailed changes in direct connectivity between 2014 and 2019 for over 1,300 NUTS3 level regions across Europe and, for the bottom 40 and top 40 regions by change in direct connectivity, the impact of the absence or presence of airport incentive schemes were assessed using cross-tabulations.

Previous research has highlighted that there are some significant disparities in air connectivity across Europe that cannot simply be explained by underlying population differences. Weighted by population, of the 1,388 regions across the European Economic Area countries plus the UK and Switzerland, direct air connectivity was found to be on average 16 times greater in the top 20% of regions versus the bottom 20% of regions. For every direct air connection in the year 2019 there were found to be an average of only 1,290 residents in the top 20% of regions versus as many as 13,270 residents in the bottom 20% of regions. Using individual country examples, Finland had the most within country disparity with an average of 79,476 residents for every direct air service in the bottom 20% of Finnish regions versus an average of only 979 residents in the most connected 20% of Finnish regions. Germany, on the other hand, had a much smaller range of 2,006 residents per direct air connection on average in the least connected 20% of German regions versus an average of 242 residents per direct connection in the top 20% of German regions.

An important next step in the research is to examine the impact of a range of policy and aviation business interventions on these developments in air connectivity across Europe to determine if they have had a positive, negative, or neutral effect on levels of air connectivity both in absolute terms and relative to other regions within and between European countries.

This research has aimed to assess the broader impact of airport incentive schemes across Europe with a focus on how it may or may not have affected the observed disparities in air connectivity between regions. The research aims are broken down into the following objectives:

1. To develop a comprehensive European airport incentive database covering over 400 airports across Europe during the 2017 to 2021 period

2. To determine if there is any evidence of the varied types of incentive schemes making a difference to pre-pandemic levels of direct air connectivity amongst the most and least connected regions in Europe

3. To assess other influences on levels of direct connectivity over the observed pre-pandemic period inclusive of regional population change.

Despite the breadth of incentives being considered in this study, there is no clear evidence that the presence and availability of these schemes has had a marked impact on the amount of direct connectivity across Europe’s regions. In fact, there is some preliminary evidence to suggest that those regions that have grown the most in terms of direct connectivity have done so due to underlying developments in economic opportunities rather than the availability of incentive schemes.

Given the prevalence of such published and unpublished schemes, this is an important finding given the time and resources airports dedicate to development and marketing of their tariff incentive schemes. Some specific case analyses covering Finnish, Spanish, Italian and Romanian regions would appear to confirm the broader findings in this study. There is also currently a lack of regulated and standardised guidance on incentive schemes across Europe. It may be possible, therefore, to see a higher stimulating effect of incentive schemes in terms of direct air connectivity - especially when combined with targeted funding for additional airport incentives in the more cut off yet populated regions.

Future research in this area should consider other policy and business interventions to determine if they can have a more pronounced impact on underlying levels of air access inequality and general levels of air access. There is a dearth of a broader analysis into the impact of Public Service Obligation routes (PSOs) and permitted state aid to smaller aviation providers on disparities in air access levels, and it would also be important to estimate the change in access levels that may take place if more targeted policies are permitted - especially if partly or fully funded by government authorities.