Title: Synthetic Control Methods for Policy Analysis: Evaluating the Effect of the European Emission Trading System on Aviation Supply

Abstract:

In this paper, we provide a novel application of synthetic control methods by offering two major tweaks to the existing methodological framework. We provide the first complete ex-post evaluation of the causal impact of carbon pricing on aviation supply, expressed in terms of airline output (i.e., number of seats supplied at the airline-route level). We exploit the policy change in the European Union Emission Trading System (EU-ETS), the first large greenhouse gas emissions trading scheme in the world. We distinguish between low-cost, regional and full service airlines, short and medium/long-haul routes, routes towards (or from) hub airports versus non hub airports, monopolistic versus non-monopolistic routes. The analysis shows that the EU-ETS does not have a substantial impact on the average aircraft size, while it has caused a reduction of total airline seat capacity and frequency, with the percentage of airline seat capacity reduction reaching above 20% at its peak. The overall effect of the policy has a remarkable impact on low-cost and regional airlines, on short- haul routes, spoke-spoke markets and monopolistic routes. Our results are the first empirical confirmation to the theoretical prediction in the aviation literature that emission charges will reduce flight frequency and increase load factors while having no effect on aircraft size.

Lecturer: Changmin Jiang

Date/Time: 10:00 – 12:00 AM, 12 April, 2022

Tencent Meeting ID: 694-378-384

Brief introduction of the lecturer: 

Prof. Jiang Changmin, a doctoral supervisor of the University of International Business and Economics, was offered a lifetime associate professorship by University of Manitoba, one of the universities of U15 Group of Canadian Research Universities. His main research field is transportation economy and policy. Prof. Jiang has officially published 2 works and 43 high-quality journal papers published in SCI / SSCI journals, including 11 international top journals in the field of Transportation (Transportation Research Part B). He also served as the guest editor and editorial board member of Transportation Research Part A, Transportation Research Part D, transportation policy and other internationally renowned journals in the field of transportation. He has presided over three projects of Canada's social science and Humanities Research Council Fund (SSHRC), and several projects supported by national fund. His research results have been widely cited and recognized, and have been cited for more than 1000 times. His papers was awarded of ten scholars with the most fruitful research results in the world on high-speed rail and 15 academic papers with the greatest influence in the world on research related to airport capacity management by Transport Policy and Journal of Air Transport Management (both SSCI journals). He has won a large number of academic research awards, including Falconer Emerging Researcher Rh Award for Outstanding Contributions to Scholarship and Research，以及International Transportation Economics Association (ITEA) Annual Conference, Air Transport Research Society (ATRS) World Conference, International Association of Maritime Economists (IAME) Annual Conference, etc.