A critical examination of an airport noise mitigation scheme and an aircraft noise charge: the case of capacity expansion and externalities at Sydney(Kingsford Smith) airport

In the wake of the Australian airline liberalization in 1990 and its foreca sted impact on air traffic, capacity has been expanded at Sydney (Kingsford Smith) airport (Sydney KSA)-Australia's busiest commercial airport-with th e construction of the third runway in 1994. Coinciding with the approval fo r this capacity expansion, the Commonwealth Government amended the Federal Airports Corporation (FAC) Act to direct the FAC to carry out activities wh ich protect the environment from the effects of aircraft operations, with t he cost to be borne by the airline industry according to the 'Polluter Pays Principle'. Noise management plans were part of the conditions for develop mental approval for a third runway. To this end, since 1995, Sydney KSA imp oses a noise levy designed to generate sufficient revenues to fund a noise mitigation scheme. Although the issues of aircraft noise, in particular its impact on property values and land use planning around the airport, have b een extensively addressed in the literature, no one has empirically examine d the implications of new environmental policies in conjunction with airlin e liberalization and change in airport infrastructure. Principles and polic y analyses are discussed in this paper. By focusing on the specifics of Syd ney KSA, broader policy issues likely to be relevant for other major airpor ts around the world are discussed. (C) 2000 Elsevier Science Ltd. All right s reserved.