1. 12/02/2015 Honours Programme Aviation Management 2014-2015 1
Airport Capacity, who is in Control?
Abstract
Air transport plays a vital role in facilitating economic growth. The increasing
demand has resulted in an imbalance between supply and demand. There is an
unprecedented pressure experienced by policy makers upon investigating and
adopting strategies for managing demand and allocating scarce airport capacity. The
purpose of this essay is threefold: (1) to identify economic benefits for the region and
(2) to investigate the influence of airlines or (3) influence of regional authorities over
the use of airport capacity. To illustrate which actor controls airport capacity, the
points of view from the airports and governments versus the airlines regarding
European legislation is used.
Introduction
Worldwide the aviation industry is growing, so is it
in the Netherlands. Growth in air traffic movements
is a growing concern for many airports and
governments. If the airports capacity is constrained
the control over the connections offered via the
airport becomes a crucial issue. To tackle this crucial
issue, the Dutch government introduced selectivity
policies to stimulate the airport’s economic function
for the region and to support national interests. By
introducing selectivity policies, the Dutch
government is reaching the borders of international
legislation and rules of demand management.
1. Economic benefits
Aviation globally and regionally plays a vital role in
facilitating economic growth. Air transport facilitates
world trade by increasing access to international
markets and allowing globalization of production.
Aviation is indispensable for tourism, which is a
major engine of economic growth. Connectivity
contributes to improved productivity by encouraging
investment and innovation; improving business
operations and efficiency; and allowing companies to
attract high quality employees 1
.
Other economic benefits of aviation - such
as the jobs or economic activity that occur when
companies or industries exist because air travel
makes them possible, or the intrinsic value that the
speed and connectivity of air travel provides - should
also be taken into account when determining the
economic importance of an airport, hub or mainport.
The Dutch government defined mainport
Schiphol as two closely tied functions with
importance for the national economy. Firstly,
Schiphol is an airport with a hub function: a traffic
junction where national, European and
intercontinental connectivity is created.
Secondly, the government defined the
mainport as a metropolitan area with high quality
living and working environments in which businesses
can work competitively in international networks of
production and consumption and where Dutch
inhabitants live, work and recreate2
. The mainport
region is determined as the North wing of the
Randstad, this is considered as the area where the
direct and indirect economic value related to the
mainport is created3
.
Concluding from multiple studies of the
CPB in 2005; the development of Schiphol Airport
into a mainport created substantial and positive
wealth effects for the Dutch inhabitants and
businesses. These wealth effects can best be
addressed as cost savings and decreased travel times.
In terms of economic importance, the CPB
determines that the direct and indirect economic
contribution of mainport Schiphol is to be valued as
approximately 1.5% of the Dutch GDP, reflecting
79.000 to 104.000 direct and indirect jobs4
.
The strategic environmental policy of Schiphol
shows that the revised demand within current
environmental limits cannot be accommodated at
Schiphol. The parties within the Alderstable therefore
agree that it is necessary within the current
environment limits to have a selective use and
development of Schiphol Airport. Secretary Wilma
Mansfield revealed Wednesday, November 26th
2014 in The Hague that the government can take
action as competition from foreign airlines such as
Emirates will influence the Dutch aviation market too
much. A new route to the Netherlands can be even
denied, writes The Dutch Telegraph. Not only in the
Netherlands, but also in other countries governments
are developing policies to manage airport capacity.
Authors:
Karin Elbers,
Ruben Portz,
Mike Snel
Keywords:
Airport capacity;
Selectivity;
Mainport;
Level playing field.

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2. Airport capacity
There is an unprecedented pressure experienced by
policy makers upon investigating and adopting
strategies for managing demand and allocating scarce
airport capacity5
. The increasing imbalance between
capacity and demand has resulted in congestion
drawing the attention of aviation policy makers. The
authorities investigate alternative means of coping
with the mismatch between aviation capacity and
demand. The solution to scarce airport capacity is
twofold: to expand existing airport infrastructure, and
to apply demand management for closing the gap
between supply (airport capacity) and demand (air
traffic).
Demand management (DM) has been a
research topic to deal with capacity shortfalls in the
transportation industry5
. DM is linked with logistics
involving strategy spanning the whole value chain
and is closely related to supply chain studies6
. In the
air transport context demand management focuses on
congestion-based pricing schemes7
and slot auctions.
To control demand on airport capacity it is a
necessity to understand the meaning of airport
capacity. Given the intensive growth rates and the
drastically changes within the aviation industry, it is
no surprise that the airport capacity problem is well
described within literature. However, one definition
of airport capacity does not seem to exist as several
authors argue the complexity of the term “capacity”.
The FAA defines capacity as the hourly throughput
that an airport’s runway is able to sustain during
periods of high demand8
. From the operation of the
airspace and runways to the flow of passengers
through the terminals; airport capacity is a complex
issue9
. Suau-Sanchez defines capacity as “the level of
airport operational ability that can be reached after
airport activity is limited due to socio-environmental
factors’10
. Madas argues that capacity at congested
airports is expressed in slots (an expression of
capacity representing the permission given to a
carrier to operate an air service at a slot-controlled
airport on a specific date and time for the purpose of
landing or take-off). Mujica Mota mentions that
capacity includes different elements namely; business
model, infrastructure, airspace and societal
conditions11
.
3. Level of control
What is not clear within literature is who can control
demand on airport capacity and which actors are
involved. Multiple European governments and
airports are developing policies relating to demand
and airport capacity management. However, since
these policies influence airport capacity they refute
the European legislation regarding the level playing
field resulting in different points of view from the
airports and governments versus the airlines.
Airlines point of view
Airlines offer air travellers a choice, but this choice
may be distorted by an uneven approach to
legislation and state aid. Due to the intense
international competition within the airlines industry
it is crucial according to the airlines to ensure
conditions for fair competition – a level playing
field12
. National and European legislation has a direct
influence on the global competitive position of
European airlines13
. It is of importance that the
legislation does not disturb the level playing field,
which is rooted by the economic principle of supply
and demand – the free market mechanism14
.
Proponents of the level playing field state that
economic regulation of airports should stop, and
should be left over to the free market principles15
.
Airports point of view
Within the European aviation market there have been
developed policies by airports and/or governments to
influence airport capacity management; i.e. the
airport and/or authorities decide to which airlines the
landing and terminal slots are allocated. To offset the
effect from the capacity constraint the airport
utilization could be increased by encouraging the use
of larger aircraft via the implementation of an airport-
wide, minimum aircraft size requirement in order to
increase the number of passenger that use the airport
within the set operational limits16+17
. Promoting
larger aircraft is the only means to increase passenger
access at airports18
.
This regulation would be applicable only at
airports that are constraint by runway capacity as
London Heathrow and New York’s LaGuardia, and
not so much at airports that are constraint by
environmental restriction as Amsterdam Airport
Schiphol. In the latter case a different policy is
suggested – selectivity. In the Netherlands a
selectivity policy regarding the capacity constraint of
Schiphol is in development that focuses on
outplacing airlines that are non-mainport related
traffic; airlines with non-business point-to-point
destinations19
. However, there is debate regarding the
term “mainport”; i.e. in what way the hub network
contributes to the mainport function of the airport.
According to the Dutch government the
mainport function should consist of a strong
KLM/SkyTeam network, a competitive airport, and a
competitive and attractive region20
. It is however
completely unclear why KLM/SkyTeam contributes
more to a competitive and attractive airport or region
than the airlines with non-business point-to-point

3. 12/02/2015 Honours Programme Aviation Management 2014-2015 3
destinations, especially looking at the value added for
the airport and hinterland by O&D passengers in
comparison to transfer passengers.
The policies are in contrast with the
European level playing field, and are therefore
forbidden by European regulation. By principle it are
the “non-mainport related traffic” airlines that
transport in percentage more O&D passengers, and in
effect invalidate argumentation for the mainport
policy. Moreover, these airlines at Amsterdam
Airport Schiphol are currently hiring more employees
than the legacy carriers, thus contributing more to
regional economic growth. Consequently is
concluded that governments cannot influence airport
capacity management by implementing related
policies since it is refuting the European level playing
field.
References
[1] KAKKAD, J. et al., 2014. Powering global
economic growth, employment, trade links, tourism
and support for sustainable development through air
transport. Geneve: Air Transport Action Group.
[2] Mainport Schiphol beleidsinformatie,
achtergrondinformatie. 2005. Den Haag: Ministerie
Verkeer en Waterstaat, Volkshuisvesting,
Ruimtelijke Ordening en Milieu en Economische
Zaken.
[3] KUIPERS, B., MANSHANDEN, W.J.J.,
KOOPS, O., VERWEIJ, C.A., VELDHUIS, J.,
ROSENBERG, F. and SCHOUTEN, E.,
2007. Maatschappelijk-economische analyse
mainport Schiphol. Delft: TNO.
[4] KRUL, J. and VELDHUIS, J., 2013. Mogelijke
toekomstbeelden voor de Mainport Schiphol in
2040. SEO Economisch Onderzoek.
[5] MADAS, M.E.A., 2008. Airport capacity vs.
demand: Mismatch or mismanagement? 42, pp. 203-
226.
[6] WILLIAMS, T., MAULL, R. and ELLIS, B.,
2002. Demand chain management theory: constrants
and development from global aerospace supply webs.
20, pp. 691-706.
[7] Levine, M.E., 1969. Landing fees and airport
congestion problem. Journal of Law and Economics
12, 79-108.
[8] FAA, , Airport capacity profiles [Homepage of
FAA], [Online]. Available:
http://www.faa.gov/airports/planning_capacity/profil
es/ [08/01, 2014].
[9] STEVENS, N., , Airport capacity; more than just
tarmac and terminals [Homepage of NATS], [Online].
Available: http://nats.aero/blog/2013/08/airport-
capacity-more-than-just-tarmac-and-terminals/ [08/23,
2013].
[10] Suau-Sanchez . allares- arbera . a l .
2011 “Incorporating annoyance in airport
environmental policy: noise, societal response and
community participation” Journal of Transport
Geography, Vol.19, Issue 2, pp. 275-284
[11] MUJICA MOTA, M. and BOOSTEN, G., 2014.
Extended Definition of Capacity in Airport Systems.

4. 12/02/2015 Honours Programme Aviation Management 2014-2015 4
Amsterdam: Amsterdam University of Applied
Sciences.
[12] International Air Transport Association (IATA),
Airline Financial Outlook Strengthens, 12 December
2013, URL: www.iata.org
[13] Association of European Airlines (AEA), Level
Playing Field, 24 November 2015, URL: www.aea.be
[14] Air Line Pilots Association (ALPA), Leveling
The Playing Field, June 2013, URL:
www.levelingtheplayingfield.alpa.org
[15] European Cockpit Association (ECA), Fair
Competition in aviation is a must!, URL:
www.eurocockpit.be
[16] Airports Commission, Comments on published
short and medium term proposals – Heathrow Airport
Limited, 27 September 2013, URL:
www.heathrowairport.com
[17] Federal Register, Congestion Management Rule
for LaGuardia Airport, 29 Augustus 2006, URL:
www.federalregister.gov
[18] Federal Aviation Administration, Notice of
Alternative Policy Options For Managing Capacity at
LaGuardia Airport and Proposed Extension of
Lottery Allocation – Docket No. FAA-2001-9854,
2001, URL: www.justice.gov
[19] Luchtvaartfeiten.nl, Fact Sheet Selectivity –
market regulation in the Dutch airport system,
Oktober 2014, URL: www.luchtvaartfeiten.nl
[20] Rijksoverheid, Essentiële elementen van de
mainport, 2 April 2013, URL: www.rijksoverheid.nl