Low-cost carriers and airports: a complex relationship

After a literature review on the LCCs phenomena, this chapter provides a taxonomy of the relationship between LCCs and airports by identifying three main themes: the relation with the regional air market (secondary/primary airports), the balance of power (dominated/non-dominated airports) and the industrial organisation (bases/non-bases). These themes are discussed by means of case studies and literature. An analysis of the main factors ruling the relative dependency between airline and airport is also provided. It considers: - The market potential of an area (e.g., population, GDP, tourist attractors,) for the carrier; - Technical aspects of the airport (e.g., turnaround time, level of congestion, availability of slots, handling,); - Incentives provided by the airport operator (e.g., airport charges, handling fees,); - Subsidies or financial guarantees from the airport/local authority. The combination of these elements shapes the level of dependency between the two parts and affects the stability of the relationship, including the actual market power of the airline and its bargaining capacity to obtain favourable agreements from the airport manager. These schemes are also discussed with respect to the recent EU regulations on state aids. Finally, a selection of case studies is discussed by means of suitable indicators (such as closeness, connectivity index, Gini index, HHI index, % ASK in competition) in order to examine the changes in the air services and network configurations as a consequence of the policies implemented by the airport operators. Relationships with the surrounding airport areas are also discussed, as a potential field of further investigation