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Posts Tagged ‘europe’

Not an aviation-related note, but given that many of my readers are also plugged into the travel industry, here’s an interesting diablogue between Bryan Caplan and Tyler Cowen.

Bryan:

When Americans visit Europe, they see a lot to like: Charming boulevards, delicious food, and historic cities that feel safe.  When Europeans visit the U.S., it’s not so pretty: While major American cities are impressive, their inhabitants can be more than a little scary even after the sharp decline in crime rates.  From an American or European tourist’s point of view, Europe seems not just more aesthetic than the U.S., but more hospitable.

He argues that American tourists see the quaintest and nicest parts of Europe, while most Europeans live in less appealing suburbs, and those who live in the attractive urban centers cannot afford to enjoy it much. Meanwhile, European tourists see some of America’s grungiest places (“NYC and SF are basically uglier, scarier versions of the premiere European cities”) but avoid the attractive suburbs where most Americans (happily) live.

“Europe is a better place for most people to visit,” he concludes. “But America is a better place for most people to live.”

Tyler, with a dig at modernist architecture:

Bryan gives some good reasons why America is better for 37-year-olds with young children, namely lots of living space and easy shopping.  But I view much of Western Europe as better for the elderly, if only because it requires less driving and they are more likely to live close to their children and perhaps also they receive more respect.  Western Europe is probably better for children too, for reasons related to safety and health care”

My alternative view is that Americans rate European life so highly (in part) because the buildings from previous eras are so striking and attractive.  If all of the U.S. looked like U.S. postwar construction, the country would still impress more or less as it does.  If all of Europe looked like its postwar construction, Americans would be less likely to admire European policies and political institutions.  Yes I know about Lille, and contemporary Spanish architecture, but in reality most Americans would think of Europe as some kind of dump.

What do you think?

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The Dutch travel tax has been so successful, it has to be scrapped:

The Dutch Government is to scrap from July 1 its air passenger ticket tax, first dubbed the ‘eco’ tax when it was introduced against major opposition by aviation and local industry last year. The controversial departure tax, which ranges from 11 to 45 euros, is blamed for a steep decline in passenger traffic at the main Dutch airports, particularly at Amsterdam Schiphol.

The tax was billed as a “green tax,” meaning that it was intended to raise the cost of flying sufficiently to deter passenger travel — and hence greenhouse gas emissions — on the margin. It apparently did this swimmingly well, better than I would have expected:

Schiphol Airport, Europe’s fifth biggest in terms of passenger enplanements, recorded a drop of 430,000 passengers in February, a 13.7% fall against the same month a year ago. The number of locally boarding passengers fell by 17.7%. The number of transfer passengers, who were exempted from the tax, declined by 8.5%.

As the story notes, this tax was not levied on transfer passengers in an attempt to keep KLM and its Schiphol hub competitive with airlines based at Paris, London Heathrow, Frankfurt, and Copenhagen. Since transfer passengers make up a huge share of Schiphol’s business, the surcharge would never have made much of a dent in the Netherlands’ aviation carbon footprint. The fact that transfer passengers were exempted and that the tax is pulled just when it seems to be working vindicates the complaints that it is a “revenue grab.”

The suspension of this tax also illustrates a tax problem. In an age of free movement across jurisdictional boundaries, tax competition is heightened, especially in areas like the low countries where a competing, lower-tax airport may be just a short drive away. “The airport operator along with Dutch carrier KLM had previously warned that potential passengers would try to avoid the tax by flying from airports across the border in Belgium or Germany,” the story report. “The Belgian Government has already abandoned a proposal to introduce a similar tax.” Unless the EU or a larger jurisdiction is going to impose a charge like this one, countries that impose it on themselves in a global downturn are making an economic death wish.

See my previous posts on the Dutch travel tax here, here, and here.

[H/T: Cranky]

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The Financial Times reports on government findings that one-third of London Heathrow Airport’s passengers are on connecting flights, which magnifies “[t]he importance of the role that connecting passengers play at the UK’s busiest airport [that] has long been a source of conflict among campaigners for and against a third runway.” The issue is a hot button in UK politics, with the opposition Conservatives dead set against a new runway and London’s mayor proposing a new airport in the Thames estuary east of the city.

The figures on transfer passengers illustrate the network effect benefits of big hubs like Heathrow. Today, more than 76 percent of connecting passengers connect from one non-UK destination to another — up from 57 percent twenty years ago. These connections redound to the benefit of London travelers as well, who have more destinations than their city alone would otherwise support. “Without [connecting passengers,] the scale of the network and range of destinations as well as the number of daily services that can be supported on routes would suffer, damaging Heathrow’s attractiveness compared to European rivals such as Paris Charles de Gaulle, Frankfurt and Amsterdam Schiphol.”

Building a new airport — a perennial idea — would do little to improve Heathrow as a hub. If Heathrow is not improved as a hub, it will eventually fall behind Frankfurt, Paris-Charles de Gaulle, Amsterdam, and Madrid-Barajas as a major connecting hub. London doesn’t need a new airport; it has three perfectly good ones, all of which can be reasonable expanded, and two smaller ones. What it needs is a hub that can compete on even ground with its European rivals.

Important role of transfer passengers [FT]

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The Wall Street Journal has a fascinating item today (via the WSJ‘s great new Middle Seat Terminal blog) on the vigorous competition emerging between Moscow’s two main international airports. I’d long read of the older, state-owned Sheremetyevo Airport as a hellish transportation hub with limited services, long lines for immigration, and oft-solicited bribes. Then, according to report Daniel Michaels, it was forced to bring its game when the privately owned Domodedovo Airport renovated a terminal in the 1990s, built a rail link to downtown, and began wooing new airlines — and even carriers that had previously served Sheremetyevo.

Moscow’s airport rivalry highlights a paradox of the global aviation industry: Airlines compete fiercely with each other for customers, but they face many monopolist suppliers, such as air-traffic control systems, fuel distributors and airports. Resulting costs and poor services get passed on to travelers.

Regulators world-wide are starting to tackle the issue — and some see Moscow as a paradigm.

Britain’s competition authority, for example, last year considered breaking up BAA, the company that runs London’s three big airports. In testimony before the regulator, officials from the International Air Transport Association, a trade group, cited Moscow as evidence of the benefits that competition could bring London’s airport system. IATA testified that fees at Moscow’s fast-growing, privately owned Domodedovo Airport are as much as 20% lower than at Sheremetyevo, the state-owned hub of flag carrier Aeroflot.

This echoes a point I’ve made before: we have a relatively competitive airline sector and a relatively uncompetitive airport infrastructure sector.

The article also points out that privatization alone will not bring competition. Consolidating ownership in a single firm, either private (BAA) or public (Port Authority of New York and New Jersey), will not engender competition. One sees more competition (and lower published airport use fees) at the three San Francisco Bay Area airports, each of which are publicly owned by different authorities, than at the three New York area airports. And the case of Moscow confirms this.

But can private airports really work here in the United States? Two fascinating items from Brett Snyder illustrate an experiment in this. Branson, Missouri — a totally retro vacation spot not far from my hometown of Memphis — is building a brand-new airport entirely without federal money. The airport will be entirely privately owned and financed. It’s not just a new terminal project: this is an entirely new airport project — 7,000-foot runway, terminal, tower, general aviation facilities — designed to offer competitive service to low-fare airlines.

The owners of the airport have also kept their construction costs down. Writes Snyder: “To flatten the tops of the mountains, build a 7,000 ft runway, erect a terminal, construct a control tower, and create a 2.5 mile access road with 2 bridges has only cost $155 million. That’s $35 million in equity with the balance in debt. As a comparison, Indianapolis spent $1.1 billion on its new (much larger) terminal and control tower.”

We need more experiments in privatization like Branson, Chicago’s Midway airport, and others here in the United States. Competitive privatization may provide the needed funding for upgrading and maintaining our aviation infrastructure.

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Britain is keeping in place — and raising — its Air Passenger Duty, a per-passenger charge levied on airline itineraries originating in Britain. The government had promised to design a new charge based on aircraft; the current charge does not correlate actual emissions to charges for them. Two aircraft of identical capacity but with different fuel efficiencies are assessed the same amount of APD. Even worse, private aircraft, cargo aircraft, and transfer passengers (mostly at Heathrow) are exempt from APD, meaning that commercial travelers to destinations in Britain are bearing the brunt of aviation’s climate impact there. If Britain is serious about taxing its own travelers and airlines to mitigate climate change, then it needs to align charges with actual impacts.

See also my earlier post on the challenges of green taxation in aviation.

UK flight taxes to rise as reform dropped [FT]

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My story in The American magazine is now up on its website. Here’s the lede: “Thirty years ago this October, the era of affordable mass air travel was unleashed. Why was this revolution stalled, and what can be done to finish it?”

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Alitalia, the feline airline with nine lives, may yet live, according to AP and Financial Times stories. (The FT lede says that the lack of a “Plan B” may keep Alitalia flying. In the real world, the lack of a Plan B means liquidation.) No one wants to buy this basket case of an airline, but Italian prime minister Silvio Berlusconi made keeping Alitalia Italian (and operating) a central item on his agenda. So, since all else seems to have failed, why doesn’t Berlusconi just buy the government stake in Alitalia himself? He’s Italy’s richest man, with a net worth of $12 billion — enough hardly to notice an investment of $600 million, which is what the last consortium was bidding.

Furthermore, aviation is an industry that attracts eccentric businessmen: Richard Branson, Donald Trump, Howard Hughes. Why not Silvio? Of course, it might be that he’s a shrewd enough businessman to recognize that Alitalia as currently constituted is a gaping money pit. Like most politicians, he’s happy to invest other people’s money in unprofitable but “patriotic” ventures. (See also: Henry Paulson, Barney Frank.)

All the same, I hereby call on Silvio Berlusconi either to pony up the cash for Alitalia or let this airline die a dignified death.

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