Fear of Flying (Loudly)

It is hard to tell what is louder: an airliner taking to the skies —or the people who live around the airports. The latter have become so vocal of late, loudly stating their complaints down their political representatives’ eardrums, that they routinely manage to block construction of new runways or even airports, and force airplanes to take off on highly steep paths in order to reduce their noise footprint on the ground.

But airport-neighbourhood residents are only one group of relevant stakeholders in the airline business. The other ones are the passengers and the airlines themselves, and ultimately the airports as well. Both safety and quality of service can suffer under noise-mitigation policies, the former through the risk posed by steep high-power takeoffs, the latter through increased operating costs that are transferred to the paying passengers. And yet, no comprehensive study of the economic impact of these issues has been made.

Until now, that is. CESifo Network researcher Jan K. Brueckner, an acknowledged expert in the airline business, and his colleague Raquel Girvin, both from the University of California at Irvine, have just published a paper dealing with airport noise regulation.

They start by reviewing the various approaches to reducing noise levels around airports. The US’s Federal Aviation Administration (FAA) and its European counterparts have imposed increasingly stringent upper bounds on noise per aircraft that manufacturers have to meet in order to receive certification. The current noise certification standard is called Stage 4 and, to give you an idea, makes new aircraft produce less than one third as much perceived takeoff noise as the original mass-market passenger jets, such as the Boeings 707 and 727.

Over the years, engine manufacturers have done much to mitigate noise—at the same time as improving fuel burn. Refinements include hi-bypass-ratio turbofans (ie, those where a mantle of cool air is diverted around the engine to envelope the hot, noisy exhaust and thus dampen the blast it produces), improved nacelles, special linings and tweaked nozzle shapes. Airframers, in turn, have enhanced aerodynamics, landing gear configurations, streamlined engine pylons, introduced new flap designs, reduced structural weight through the use of composites and much, much more.

This has meant that the number people exposed to significant aircraft noise fell by a factor of 16 between 1975 and 2000 in the US, despite a more than three-fold increase in airline traffic over the period.

Still, that is not enough for many airports. Some of them impose their own per-aircraft noise limits, fining operators that exceed them. Others set night curfews, restrict the number of available slots (openings for takeoffs and landings), impose higher fees for noisy craft, set cumulative noise limits, and direct airlines to adopt steep, high-power takeoffs. Noise taxes, in turn, make airlines pay a tax per unit of noise, a practice more common in Europe than in the US.
                             
Most of these measures entail higher costs for the operators —for instance, steep climbs are less fuel-efficient and increase engine wear and tear, quieter aircraft are more expensive than older, noisier ones, and so on— which are then transferred to the passengers. Fewer frequencies due to slot restrictions or curfews curtail the quality of service, limiting passenger choices.

The study separated the various regimes into two groups: noise taxes, and per-aircraft and cumulative noise limits. It then examined, using numerical methods in a highly stylized model, their respective welfare-level yields.

The analysis shows that noise regulation does harm airline passengers by raising fares and potentially reducing service quality. Cumulative and per-aircraft noise regulation have different effects on airline decisions, the former affording them a bit more flexibility to schedule different kinds of aircraft to better meet fluctuating demand. Still, the best a planner can do under cumulative regulation is to use an inefficiently tight noise limit that yields lower-than-optimal flight frequency. Additionally, cumulative regulation appears to be superior from a social-welfare perspective and is equivalent to noise taxation, generating exactly the same airline decisions when the tax rate is suitably chosen.

Given the fact that most aircraft currently in production already have lower noise signatures that the latest Stage 4 FAA certification standard, it would appear that airports do not consider these noise limits stringent enough and therefore impose their own airport-level regulations. These, in turn, generate a demand for aircraft quieter than the current FAA standard. In other words, airports effectively determine aircraft quietness.

It could be expected that, out of institutional pride, the FAA would then seek to impose a per-aicraft limit that is even more stringent than the Stage 4 limit. But, the authors' analysis suggests, since a cumulative noise limit (or the equivalent tax) appears to be a superior instrument, airport-level regulation may actually be the preferable policy.

The authors acknowledge that the model can be extended and refined by adding, for example, the airports to the list of stakeholders, more-realistic specifications of the airline's noise-abatement cost function, as well as the concurrent implementation of noise-abatement measures. Still, the model in the present study constitutes a solid starting point for devising, well, yes, sound policies regarding airport noise. It might even abate those noisy residents as well.

Jan K. Brueckner and Raquel Girvin: Airport Noise Regulation, Airline Service Quality, and Social Welfare, CESifo Working Paper No.1820

• Other CESifo Working Papers dealing with the airline industry
• Other CESifo Working Papers dealing with transportation
• Other CESifo Working Papers by Jan K. Brueckner
• CESifo Working Papers published in the past three months