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This study is a publication issued by the Microeconomic Analysis service of the National Bank of Belgium, in partnership with the Department of Transport and Regional Economics of the University of Antwerp (UA). It is the outcome of a first research project on the Belgian airport and air transport sector. The former relates to the economic activities within the airports of Antwerp, Brussels, Charleroi, Kortrijk, Liège and Ostend, while the latter concentrates on the air transport business as a whole. In the past few years, the logistics business has come to play a significant part in income creation in our country, whose economy is to a large extent driven by services1. Air transport and airports in particular are driving forces in this context, not only in terms of business generated within the air transport cluster, but also in terms of airports' attractiveness. On world scale an overall growth of cargo and passengers could be observed in the last ten years. However, the air transport sector has undergone a major crisis during the 2001-2003 period, when passenger traffic numbers first fell sharply and then stagnated. Only after 2003 this activity has picked up again and this until the third quarter of 2008. Cargo traffic on its part recovered already in 2002. In Belgium, a similar evolution can be observed. It should be stressed however that between 1997 and 2007 cargo volumes grew much faster than passenger traffic did. The rankings of European airports underline the importance of cargo traffic for Belgium: In 2006 Brussels, Liège and Ostend-Bruges respectively occupy ranks 6, 8, and 20 in the European cargo airport top 20, while for passenger airports, Brussels can only be found at the end of the top 20. In this study, a sectoral approach has been followed by focusing, for every airport, on two major economic activity components: the air transport cluster on the one hand and other airport-related sectors on the other hand. In that respect, annual accounts data from the Central Balance Sheet Office were used for the calculation of direct effects, the social balance sheet analysis and the study of financial ratios. Due to an inevitable time lag in the data provision, the analysis was limited to 2006. Like in other sectoral studies published by the Bank, indirect effects have also been estimated on the basis of data from the National Accounts Institute. In 2006, the total activities under review –direct and indirect, inside and outside airports- accounted for roughly 6.2 billion euro, i.e. 2 p.c. of Belgium's GDP and domestic employment. Considering the direct effects only, these percentages both amounted to 0.8 p.c. The three major airports, i.e. Brussels, Charleroi and Liège, alone account for 95.2 p.c. of the direct value added generated by the six airports under review. They represent 0.5 p.c. of Belgian GDP and, taking account of the indirect effects, 1.1 p.c. of the national income. Furthermore, it has to be pointed out that most Belgian airports are specialised. While the airports of Liège and Ostend focus on air cargo, Charleroi Airport deals mostly with low-cost passenger transport. Moreover, the smaller regional airports like Antwerp and Kortrijk focus on business travel. The analysis was completed in December 2008

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Network analysis has already a long history in operations research and quantitative social science research. In the past, much attention has been paid to shortest-route algorithms (for example, the travelling salesman problem), where the spatial configuration of networks was put in the centre of empirical investigation. Integer programming, linear and nonlinear programming turned out to offer a proper analytical toolbox. In recent years, we have seen several new trends, in particular, the rise of hub-and-spoke systems in liberalized networks, the emergence of dynamic adjustments to new competitive conditions and the increase in complexity in international networks. Furthermore, it appears that in the past decades many social, spatial and economic systems show an organized pattern characterized by network features, such as transportation, telecommunication, information or energy systems. As a consequence, much attention has recently been paid to the study of network properties emerging in many social, spatial and economic fields, as witnessed by the vast amount of literature published in the past years. Air transport is a prominent example of modern network constellations and will be addressed in this paper from a connectivity perspective. Air transport shows indeed clear network features, which impact on the way single airline carriers operate. The abundant scientific literature on airline networks has addressed this topic in terms of theoretical modelling and empirical measurements on different typologies of airline network configurations. This strand of recent research aimed to measure the network structure in relation to the effects of: (a) the market deregulation in United States in 1978 and in the European Union in the 1990s, (b) new trends in recent airline business strategies denoted as ‘low cost’ principles. Low cost carriers developed rather fast after the deregulation policy, by acquiring a competitive network advantage on traditional airlines, which consequently seemed to reorganise rapidly their airline network to respond to the new market dynamics. In this context, interesting research has emerged that mainly addressed the issue of describing and classifying networks by means of geographical concentration indices of traffic or flight frequency. These measures, such as the Gini concentration index or the Theil index, provide a proper measure of frequency or traffic concentration of the main airports in a simple, well-organized network. However, if a real-world network structure is complex, including multi-hub or mixed point-to-point and hub-spokes connections, the concentration indices may record high values for all types of structure, but fail to clearly discriminate between different network shapes. There is a need for a more appropriate measurement of connectivity structures in complex networks. Starting from the above considerations and research challenges, the present paper aims to investigate the scientific potential and applicability of a series of network connectivity/concentration indices, in order to properly typify and map out complex airline network configurations. Specifically, these various network indicators will be adopted and tested to describe the main properties – in terms of the network connectivity and configuration – of Lufthansa’s airline system.

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simulation model of international tourist flows is used to estimate the impact of including carbon dioxide emissions from aviation fuels in the European Trading System. The effect on global carbon dioxide emissions from international aviation is minimal: -0.01% at current permit prices, and -0.13% for the aggressive climate policy advocated by the Stern Review. In the latter case, total CO2 emissions from fossil fuels would fall by 0.004%, and total greenhouse gas emissions by 0.002%. Tourist numbers in Europe would fall by up to 0.6%, and would increase in the rest of the world. If the permits are grandparented, the airlines would receive a subsidy of €3 bln at current prices, and €40 bln for the Stern policy. If permits are auctioned, the effect on the airline industry would be minimal. Including aviation in the market for emission permits has almost no effect on the environment and may have a negative effect on the economy.