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Analysis of cost-effectiveness in the provision of air navigation services at functional air blocks

Author

Listed:
  • Alberto Ansuategi

    (UPV/EHU, Spain)

  • Ibon Galarraga

    (Metroeconomica SL, Spain)

  • Luis Orea

    (Universidad de Oviedo, Spain)

  • Thomas Standfuss

    (German Aerospace Center (DLR), Germany)

Abstract

The Single European Sky (SES) legislation is intended to have a major impact on the fragmentation in the European Air Traffic Management and Communications, Navigation and Surveillance (ATM/CNS) system. A fundamental aspect of the SES initiative is functional airspace blocks (FABs), which have the goal of reducing the inefficiencies—in terms of safety, capacity, and cost—that result from the fragmentation of European airspace. FABs are seen as an explicit bottom-up first step toward the ultimate integration of European airspace. In this article, we focus on the analysis of the evolution of the cost-effectiveness in the provision of ATM/CNS services at FABs. We proceed in two stages. First, we develop a theoretical framework that allows us to decompose the change in cost-effectiveness of FABs into its basic sources. Second, we use stochastic frontier analysis techniques to estimate the cost equations and decompose the change in the cost-effectiveness of the nine European FABs into several components. Our analysis sheds light on (1) the drivers of changes in the air navigation service providers (ANSPs) and FABs cost-effectiveness from 2006 to 2016, (2) the role that FABs play in enhancing cooperation between ANSPs to obtain operational efficiency gains, and (3) the existence of economies of scale in the European ATM/CNS service provision.

Suggested Citation

  • Alberto Ansuategi & Ibon Galarraga & Luis Orea & Thomas Standfuss, 2019. "Analysis of cost-effectiveness in the provision of air navigation services at functional air blocks," Competition and Regulation in Network Industries, , vol. 20(4), pages 305-318, December.
    • Handle: RePEc:sae:crnind:v:20:y:2019:i:4:p:305-318
    DOI: 10.1177/1783591719870096
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    References listed on IDEAS

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    1. Dempsey-Brench, Zara & Volta, Nicola, 2018. "A cost-efficiency analysis of European air navigation service providers," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 11-23.
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    5. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
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