ABSTRACT
Economics considers air transport, and transport services in general, as intermediate services, that is, services that are used not as ends in themselves but as a means to some other ulterior consumption or production. Any investment in air transport capacity will affect some combination of door-to-door travel time and schedule delay. Travellers are willing to spend money to save time to the extent that the time used in travelling could be used for other productive or leisure activities. The money cost of travel involves the ‘out of pocket’ money price that the traveller or shipper pays for the door-to-door journey. The most common adjustments involve energy costs, should energy taxes apply, and labour costs. The chapter discusses the employment issues. As an alternative to environmental taxes, externalities can also be internalised by requiring the polluter to abate the pollution.
