Expanding Airport Capacity underConstraints in Large Urban Areas:
The German Experience
Prof. Dr. Hans-Martin Niemeier
Roundtable on “Expanding Airport Capacity under Constraints inLarge Urban Areas” of the International Transport Forum at theOECD 21-22 February 2013, ParisIssues• Airport expansion a hot potato• Five research questions:
1. How have German airports extended capacity?
Has capacity been expanded on an optimal scale
and time?
2. What are the key problems of airport investment?

3. How have investment decision been assessed? Bywhat methods?
4. What are the strength and weaknesses of theGerman decision process?
5. What can be learned?

Prof. Dr. Hans-Martin
Niemeier

AgendaI.

Overview and Case Studies on Investmentof German Airports

II. Key problems of Airport Investment
III. Assessment of Decisions on Capacity
Expansion of Airport: Strengths andWeaknesses
IV. Summary and Recommendations

Prof. Dr. Hans-Martin
Niemeier

I. Investment
Passenger and freight of German airports

year
Prof. Dr. Hans-Martin
Niemeier

I. Investment: Six airports
Passengers

Source: ADV

Prof. Dr. Hans-Martin
Niemeier

I. Investment
Airport
Locationchosen/openRunway
extensions(year/ km)
New
RunwayBBIDUES HAM
1996/pa 1914/19 /1911
st 2015 27

FRA
MUC
STR
1934/19 1969/19 1936/19
36
92
39N.A

1952/19
69 up to3 km.
Two 3,6 2nd /Km, 41993
km

1935- 64
3,3/3,6km
No

Publicplanning/
constr.
Mediation
Slots 1992
- 2012At least
19 years

24 years
2 nd rw

3 years
apron

Yes
NANo
No
34 to 43 42 to 51
26,5 %
21,4 %

195760/ 3,93 km
3 rd/1984
4 th/2011
22 y, 3.
rw/10 y.
4 rw
Yes
66 to 91
37,8 %

NA
3 rdvoteddown
2012
13 y.
planning

19511996 to3,3 km
No newrw
before2016-20.
NANo
No
68 to 90 24 to 42
32,3 %
81,8 %
Prof. Dr. Hans-Martin
Niemeier

I. Investment: Peak capacity
Maximum Number of Coordinated Movements

Prof. Dr. Hans-Martin
Niemeier

I. Introduction:• Airports have wasted resources in building runways forintercontinental traffic
Table 1: Profitability of Long haul runways at secondary European Airports in2007

Potentially profitable
Unprofitable
No long haul flights atall
Number of Airports

Germany
30%
50%

Spain
19196220%
1016UK
71,4%
14,3%

EU26%
27%

14,3%
748%113

Source: Based on Maertens (2009 and 2010)• Münster-Osnabrück Airport
 applied for public approval for runway from 2,2 Km to 3,6 Km Agreement on a runway of 3,000 meter in 2011 Less than 1 Million passenger

Prof. Dr. Hans-Martin
Niemeier

I. Investment: Entry & Exit
1995 -2012•••

Source: Niemeier, 2012

10 Entries
3 Exits
Not reduced
excess demandProf. Dr. Hans-Martin
Niemeier

I. Introduction• Location of major airports chosen before the SecondWorld War.
• 50/60 ties: To changes in technology & demand publicairports reacted in the with an runway extension.
• 70 ties: Conflicts emerged with the growth of cities andstepwise extensions, more movements & noise of firstjets• 70/80 ties: Conflicts accelerated & caused even violent
protest.
Prof. Dr. Hans-Martin
Niemeier

I. Introduction• Mediation limited use in Berlin, major role in Frankfurt.
• Conflicts led to long planning processes,demonstrations and court decisions. Still unresolved.
• Capacity have become scarce only at a few airports.
There is evidence for excessive investment inintercontinental capacity and in regional airports.
• Capacity has increased substantially sometimes at highcosts (chemical plant removal at FRA, 2 billion costoverruns at BBI)
Prof. Dr. Hans-Martin
Niemeier

II. Key Problems• Transaction cost perspective:

 Airports are long term relationship specificinvestments plagued with hold up problems,opportunism, externalities and imperfect

information.
 Costs and benefits are unevenly distributed inspace and lead to NIMBY reactions in the direct
neighbourhood of airports.
Prof. Dr. Hans-Martin
Niemeier

II. Key Problems• Airport & Regulatory Economics:

 German airports have expanded their capacity
under a regime of cost based regulation and slotcoordination.
 Regulation and slots break the link between
scarcity and pricing so that prices lose theirsignalling function for investment.
 Cost based regulation sets incentives for
inefficient pricing and for excessive and too costlyinvestment.
 The lack of independent regulation leads toregulatory capture and rent seeking
Prof. Dr. Hans-Martin
Niemeier

II. Key Problems• Mega project economics:
 Airport investments might turn into mega projects
with benefit shortfalls and/or cost overruns.
 The failure of mega project is due to the lackpublic sector or private sector accountability.
 Public control and transparency are not
implemented or competition does not work
effectively.
 Cost Benefit Analysis and forecasts should bemade by independent organizations and be peer
reviewed.
 Private risk capital should be involved in theproject.
Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Strength• The planning process has democratic legitimation.
• It addresses the conflict of interest and with approval
decision controlled by the court.
• It provides stakeholders with planning security toinvest in long term relation specific objects.

Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses• Planning process lacks
 full compensation & encourages neighbours to take all legal &political action.
 an independent planning authority. Quasi-independency is not
accepted by citizens.
 long term commitment.

• Mediation can compensate partly lack of independency ofthe planning institution, but recommendations are not legally binding.
 poor Berlin Brandenburg airport and better though not of a
sufficient quality in Frankfurt.
Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses• Investment decisions are not assessed by Cost Benefit
Analysis, but by Impact Analysis.
 BBI P: 30 Mio PAX. Inputs: 2.8 Bill € direct: 17.000, indirect: 11.300, induced: 12.200 jobs = 31500
jobs (Baum et al. 2005)
 BBI B: 30 Mio PAX Inputs: 5.6 Bill € direct: 32.00, indirect: 22600, induced: 24.400 = 63000 jobs
(Niemeier, 2013)
Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses• Investment decisions are not assessed by Cost BenefitAnalysis, but by Impact Analysis.
 Direct & indirect effects of are greater the more costly andunproductive an airport is. Induced effect is independent of theinvestment object.
 Impact Analysis creates the ideology that jobs can only be created
if noise and environmental burdens are accepted.
 Impact Analysis is intentionally misused by airports to legitimize
investment and to delude the public.
 Geffray Gazzard of Friends of the Earth (1999, p. 6): UK AdvertisingStandards Authority ordered Manchester Airport to withdraw the claimthat 48,000 jobs would be created by the second runway

Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses• The planning process of airports
 lack a vigorous ex-ante and ex-post evaluation of forecasts.
 tends to reduce airport competition & encourages rent seeking toerect legal barriers of entry.
 BBI airport under private
or public ownership
regime monopolized themarket and prevented
entry of LCC airport

Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses• Negative externalities of airport expansion are notefficiently addressed Efficient or acceptable noise budgets are not
implemented at German airports.
 After 36 years German law for Noise Protection has
been reformed with improved noise protection
norms, but with no legal binding exposure
thresholds.
Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses
AirportNightcurfew
hrs
Restrictions
for louder
aircrafts
Noisesurcharge
Demand ofinitiatives

BerlinBrandenburg
23 to 5:00

Düsseldorf

Hamburg

Frankfurt

MunichStuttgart

24 to 6:00

24 - 6 pm

23 - 5:00

24.– 6.

NAYes,
23 - 6.00

Yes,
23:00 -24

24- 5.00
Noise &movement
budgetYes 22 –24; 5- 6NA

Yes

yes

yes

yes

22.00 – 6.00

22:00 7:00

22.00
7.00

22-6.00

22-6.00

Yes,
23.3024.
yes
22.007.00• Noise budget set at an efficient or at a politically acceptable level havenot been implemented although they seem to be suitable for the timefrom 22.00 to 24.00 and 5.00 to 7.00 hrs.
• Noise surcharges have been reformed though rather late and still do notlead to any measurable substitution effects.
Prof. Dr. Hans-Martin
Niemeier

III. Assessment: Weaknesses• Does limiting capacity expansion at Frankfurt hub
endanger the competitive position ?
 Answered by mediators, but without vigorous
assessment• Overall, planning system has led to avoidable transaction costs
 costly and inefficiently used infrastructure
 avoidable environmental costs.
• No wonder that investment in airports has been criticizedby a large group of citizens not confined to a few living
under the flight paths of airports.

Prof. Dr. Hans-Martin
Niemeier

IV. Recommendations
1.

Independent planning authority separated from theowners of airports

2. Open and transparent planning process

3. Compensation of directly negative affected citizens
4. Mandatory ex-ante & post controlled CBA
5. Market based environmental policy

6. Reforming governance structure: more competition,less subsidies, independent economic regulator,
better pricing of scarce capacity

Thank you very much

Prof. Dr. Hans-Martin
Niemeier