An Analysis on the Determinants and Ecological Implications of Aircraft Size on Intra-European High Demand Routes

Abstract

Due to the inclusion of commercial aviation into the European Union’s Emissions Trading Scheme (EU ETS), a market based measure aimed at reducing anthropogenic climate change, airlines need to find ways to fur-ther reduce their fuel consumption. Using larger aircraft is one means of doing so, as larger aircraft typically are more fuel efficient than smaller ones. However, market forecasts predict the lion’s share of future traffic growth to be accommodated by additional frequencies, as opposed to larger aircraft. This study utilizes highly detailed longitudinal panel data on 85 intra-European routes over the course of ten years to analyze how an airline’s choice of aircraft size, and in turn, its fuel efficiency, is influenced. Findings show that network lay-outs, competition intensity and fuel price all play key roles in aircraft size choices. Crucially, it appears that the EU ETS may pose a greater challenge to Full-Service-Carriers than to their Low-Cost competitors, as nu-merous aspects of their business logic lead to slightly smaller, and in turn, less fuel efficient aircraft.