Air Transport Research SocietySan Francisco

22nd March 2007

MIMENoise Trading

forAircraft Noise Mitigation

Peter HullahEUROCONTROL Experimental Centre

Brétigny sur Orge, France

EUROCONTROL

European Organisation for the Safety of Air NavigationEuropean Air-Traffic Management organisation

Currently 37 Member States

5 objectivesHeighten Safety

Increase Capacity

Reduce Delays

Enhance Cost-Effectiveness

Minimise Environmental Impact

4 activity pillars:Co-operative network design;

Pan-European functions;

Regional ATC services;

Regulatory activities and support to EC regulation.

EUROCONTROL Experimental Centre (EEC) entrusted with executing the Agency’s research, development and validation programmes

SocietySociety EnvironmentEnvironment

EconomyEconomy

SustainableDevelopmentSustainable

Development

Sustainable Air Transport

Noise Management

Noise Reduction at Source

Operating Restrictions

Land-Use Planning and Management

Noise Abatement Operational Procedures

ICAO Balanced Approach

The last option is a last resortIn theory!

It’s generally all that’s available

Current Noise-based Restrictions

128 1244Noise surcharges

15114Noise budget

367183184Engine run-up

1058520APU

52448Stage 3 restrictions

358168190Preferential runways

425228197Noise abatement procedures

483513Noise quotas

936033Noise limits

23015474Curfew

TotalRest of worldUSA

Growth in Airport Noise Restrictions

Internalisation of external effects

Fundamental principle of environmental economics:Any externality should be internalised as close to its source as possible

Three major types of “incentive” for internalisationPricing

PenaltiesFor deviation from standards

RationingBy quantity

Can be mixed

Recent Environmental Markets

Many current examples of use of market forces

CO2 emission reduction2005EUEuropean Union Emission Trading Scheme (EU ETS)

CO2 emission reductionWorldKyoto Protocol Greenhouse-gas emission trading

improve fuel efficiency of new cars by 25% relative to 1995 levels by 2008

EUEuropean car manufacturers (ACEA) voluntary agreement

speed up the introduction of electronic vehicles

ongoingCAZero Emission Vehicle Program

limiting pollution and noise from truck traffic

ongoingAustriaEcopoint Programme

targeted two gases, SO2 and NOX

LARegional Clean Air Incentives Market RECLAIM

N. CO / CATradable Water Abstraction Rights

Water-pollution controlNL & DEWater-pollution control

local air-quality controlUSEmission trading

phasing out lead in gasoline1980sUSLead Trading Program

ObjectDateWhereName

Operation of a Market-based System

Permits issued to meet desired measure of total impact across specified region

Allocated to sources of impact in regionfree or paid for by polluters

Number of permits allocated to a particular companybased on previous impact, declared future impact, or by auction etc.

Reducing impact leaves surplus permitsmay be traded

If impact limited, available permits will be limitedscarcity value associated with each permitencourages trading of permits.

Advantages of Market-based Systems

Departure from standards-based regulation easier than tax-based approach

more cost effective

Can be revenue neutralproducers don’t see them as “just another tax-collection scam”

initial permitscould be freely allocated up to the predefined limitsall financial transactions are between the companies themselves

Excess permits due to reduced pollutionsold to recuperate investment in less polluting equipment

cover pollution from increased production

Taxes, charges and fines restrict growth

Tradable permits encourage it

Noise Trading – An Example

2-hour Leq at a major international airport produced by ENHANCEEuropean Harmonised Aircraft Noise-contour Modelling Environment

Produces noise contours from 3D radar trajectories

Can be used to produce contours on a “per-airline” basis

Noise per Airline

Area of 24-hour 55dB(A) Leq Contour vs Mvts per airline

Major carrier is just less than 50% of all flights!

All other companies in bottom left sector

y = 0.0904x

R2 = 0.9909

0

20

40

60

80

100

120

140

0 200 400 600 800 1000 1200 1400

Number of Operations

LA

eq

-24h

55 d

BA

Co

nto

ur

Are

a (k

m^

2) All flights

Main “Hub” carrier

Noise per Airline

y = 0.0904x

R2 = 0.9909

0

1

2

3

4

5

6

7

0 10 20 30 40 50 60

Number of Operations

LA

eq

-24h

55

dB

A C

on

tou

r A

rea

(km

^2)

“QuietAir.com” 51 mvts with noise of

44 mvts

“Heavy Metal Airlines” 2 mvts with noise of 65 mvts

“Air Rightnoise” 22 mvts with noise of

22 mvts

Noise Trading vs Slot Trading

Recent Slot trading transactions

$110 113 National - 24 LaGuardia

National & LaGuardiaRepublic Holdings2005

$89.90 6 gates + slotsChicago airports - National and LaGuardia

SWA2004

$87.50 14 gates + 8 slots National - 19 slots LaGuardia

National & LaGuardiaAirTran2004

£20 2 pairLHRQantas2004€7.1 M 224 + Gandolf CoCDGAlitalia2004£12 4LHRBA2003£35 loan 8 slotsLHR (Swiss)BA2003£30 7LHRBA2003£3.44LHRBA2002€2.4 M 2GatwickVA2001$500 173TWAAA2001$215 (offer) 119 jet + 103 commuterLHRCO2000£2 per slot7GatwickVA1999£76Cityflyer purchaseGatwickBA1999$16.30 8LHRBA1997$150 40 + 3 gatesORDAA1992£18 per slot ?LHRAA1991$61 6NationalUSAirways1991$61 62 jet - 46 commuterLaGuardiaUSAirways1991$85 64 ÷ (6 A380)LaGuardiaCO1991$54 21 slots - 3 gatesORDUA1991$32.50 18Hatsfiled (Eastern)DL1991$3.50 7LaGuardiaDL1991$5.40 9NationalDL1991$7-14 14LaGuardiaAA1990$19.30 14NationalUA1990Cost (millions unless noted) Number of slotsAirportAirlineDate

Economic value

The UK’s recent £5 additional “environmental surcharge” on (economy!)passenger tickets

Average aircraft with 120 passengers = £300 = €450Imagine this as a noise permit value, instead of a tax

Say “QuietAir.com” has 51 movements per day, 365 days per yearSells 7 permits per day (only needs 44)7 x 365 x €450 = €1,149,750 per annum additional return on investment from this airport alone

Say “HeavyMetal Airlines” has 2 flights (= 4 movements) per weekIf they bought a new aircraft that produced “average” noiseWould free-up 2 x 63 = 126 permits per week126 x 52 x €450 = €2,948,400 per annum – just from this airport!

Permit definition

The previous example was just that – an exampleNeed good, usable, definition acceptable to airlines and residentsNoise contours are not easily addable - non linearDoes not take annoyance into account

More annoyance from many quiet flights than from a few loud onesWhy count noise where there aren’t any people?

What granularity is needed?How will permits be attributed?

Sale, grandfather rights, auction etc.How to combat restrictive practices?How will airports know if noise rading will work for them?What regulation is needed?

MIME will find the answers!Market simulationNoise technology

MIME partners

Industry: Boeing R&TE (Spain)

(Co-ordinator)

R&D: SINTEF (Norway)

QinetiQ (UK)

Universities: U. Leeds (UK)

TU Munchen (Germany)

SMEs: ENVISA (France)

EUROCONTROL Experimental Centre (France)

MIME

Thank you

Peter HullahEUROCONTROL Experimental Centre

Brétigny sur Orge, France