Public service obligations for air transport in the United States and Europe: Connectivity effects and value for money. (December 2016)

• Record Type: Journal Article
• Authors: Wittman, Michael D.; Allroggen, Florian; Malina, Robert
• Is Part Of: Transportation research. Volume 94(2016)
• Page Start: 112
• Page End: 128
• Publication Date: 2016-12
• Subjects: Public service obligations -- Air transport subsidies -- Essential Air Service -- Small community air service -- Connectivity; Transportation -- Research -- Periodicals; 388.011
• DOI: 10.1016/j.tra.2016.08.029
• Languages: English
• ISSNs: 0965-8564

Abstract

Highlights: Public service obligations (PSOs) for air transport are reviewed in 12 countries. A worldwide connectivity model is used to assess PSO market access outcomes. PSOs represented 2.5% of movements and 1% of connectivity in these countries. A new PSO subsidy dataset is introduced covering 90% of PSO movements in 2010. Over USD$900 million was earmarked for publicly-funded air service in 2010. Abstract: Public service obligations (PSOs) are used by governments in many countries, including the United States and 11 countries in Europe, to mandate a minimum level of commercial air transportation service, especially for small or rural communities. This paper analyzes PSOs in these 12 countries for the year 2010 using the recently proposed Global Connectivity Index to measure direct and indirect market access and a novel subsidy database covering 90% of PSO movements in these countries to assess value-for-money. We show that PSO services represent about 2.5% of all commercial movements in the 12 countries analyzed, generating about 1% of these countries' total air transport connectivity. Over all routes for which data was available, approximately USD$ 900 million was earmarked for PSO and air service discount provision in 2010, with average subsidies per movement ranging from about $700 to $3500. PSO market access and efficiency outcomes vary across the countries analyzed. Some countries, such as Germany and the United States, focus on providing network access for smaller communities, thereby creating not only point-to-point, but also onward connectivity, while others such as Norway, Sweden, and Ireland, predominantly aim at providing "lifeline services" that connect remote regions to a nearby economic center without providing onward connections.