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Managerial perceptions of incentives for and barriers to competing for regional PSO air service contracts

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  • Merkert, Rico
  • O’Fee, Basil

Abstract

While it has been established in previous research that public support for air services to peripheral or economically underdeveloped regions is justifiable, the current EU Public Service Obligation (PSO) air service mechanism and particularly, the level of competition for PSO contracts, can be improved. This paper sets out to identify best practice for PSO contract sponsors by viewing issues from an air operator perspective. The heart of this paper is a survey of European regional airlines. We examine the airline managers' perspectives in relation to assessing and bidding for PSOs on scheduled air services. Possible areas for improvement include issues around the dissemination of PSO opportunities in the single market, adequate response times for proposal preparation/submission and preparing for the service launch date as well as incentives to develop the air service during the contract period in terms of revenue and patronage. We also highlight issues related to entry barriers, risk sharing, transparency and effectiveness of PSO contract awarding procedures.

Suggested Citation

  • Merkert, Rico & O’Fee, Basil, 2016. "Managerial perceptions of incentives for and barriers to competing for regional PSO air service contracts," Transport Policy, Elsevier, vol. 47(C), pages 22-33.
    • Handle: RePEc:eee:trapol:v:47:y:2016:i:c:p:22-33
    DOI: 10.1016/j.tranpol.2015.12.002
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    References listed on IDEAS

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    1. Merkert, Rico & O’Fee, Basil, 2013. "Efficient procurement of public air services—Lessons learned from European transport authorities' perspectives," Transport Policy, Elsevier, vol. 29(C), pages 118-125.
    2. Calzada, Joan & Fageda, Xavier, 2014. "Competition and public service obligations in European aviation markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 70(C), pages 104-116.
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    8. Kappes, Jan Willem & Merkert, Rico, 2013. "Barriers to entry into European aviation markets revisited: A review and analysis of managerial perceptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 57(C), pages 58-69.
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    Cited by:

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    2. Wittman, Michael D. & Allroggen, Florian & Malina, Robert, 2016. "Public service obligations for air transport in the United States and Europe: Connectivity effects and value for money," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 112-128.
    3. Antonio Martínez Raya & Víctor M. González-Sánchez, 2020. "Tender Management Relating to Imposition of Public Service Obligations on Scheduled Air Routes: An Approach Involving Digital Transformation of Procurement Procedures in Spain," Sustainability, MDPI, vol. 12(13), pages 1-27, July.
    4. Rex, Justin & Ballard, David & Garrow, Laurie A. & Mills, Russell W. & Weingart, David, 2022. "A new GIS database documenting the prevalence of U.S. air service development incentives," Journal of Air Transport Management, Elsevier, vol. 98(C).
    5. Koo, Tay T.R. & Hossein Rashidi, Taha & Park, Jin-Woo & Wu, Cheng-Lung & Tseng, Wen-Chun, 2017. "The effect of enhanced international air access on the demand for peripheral tourism destinations: Evidence from air itinerary choice behaviour of Korean visitors to Australia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 116-129.
    6. Merkert, Rico & Beck, Matthew, 2017. "Value of travel time savings and willingness to pay for regional aviation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 96(C), pages 29-42.
    7. Lohmann, Gui & Vianna, Camila, 2016. "Air route suspension: The role of stakeholder engagement and aviation and non-aviation factors," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 199-210.
    8. Merkert, Rico & Beck, Matthew J., 2020. "Can a strategy of integrated air-bus services create a value proposition for regional aviation management?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 527-539.

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