Local emission charges – A new economic instrument at German airports

In January 2008, charges were introduced at selected German airports aimed at reducing local emissions of nitrogen oxide and hydrocarbon. The charge is aimed at setting economic incentives to accelerate the introduction and foster the use of environmentally friendly engine technology and is designed to be revenue-neutral in the sense that it does not increase the airports' overall revenues from air traffic. To achieve this, the general landing fees need to be decreased by the amount of the emission charge. The introduction of this charge will have economic impacts on airlines and may have an impact on airline competition in the German air transport market. Case studies based on empirical data are presented for selected German airports. The results indicate that airline's finances will be affected differently by the emission charge, depending on the engines employed and on the aircraft population of the airport considered.