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The potential impact of removing public service obligation regulations on air fares between the Italian Mainland and the island of Sardinia

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  • Francesco, Antonio Di
  • Pagliari, Romano

Abstract

This paper assesses the potential impact on air fares as a result of removing Public Service Obligations (PSOs) that have been imposed on air services between the island of Sardinia and selected cities on the Italian Mainland. Results show that removing conditions and restrictions set by the PSO would result in higher fares and reduced fare stability. There are also likely to be traffic mix substitution effects with a greater proportion of inbound tourists at the expense of the Visiting Friends and Relatives (VFRs) market. Liberalisation is also expected to lead to higher load factors and reduced seating capacity in the summer months while lower load factors and reduced capacity/frequency would be expected in winter. These observations would be especially marked on routes between the Mainland and the Northern Sardinian airports of Olbia and Alghero.

Suggested Citation

  • Francesco, Antonio Di & Pagliari, Romano, 2012. "The potential impact of removing public service obligation regulations on air fares between the Italian Mainland and the island of Sardinia," Journal of Transport Geography, Elsevier, vol. 24(C), pages 332-339.
    • Handle: RePEc:eee:jotrge:v:24:y:2012:i:c:p:332-339
    DOI: 10.1016/j.jtrangeo.2012.03.012
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    Cited by:

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    2. Fageda, Xavier & Suárez-Alemán, Ancor & Serebrisky, Tomás & Fioravanti, Reinaldo, 2018. "Air connectivity in remote regions: A comprehensive review of existing transport policies worldwide," Journal of Air Transport Management, Elsevier, vol. 66(C), pages 65-75.
    3. Fageda, Xavier & Jiménez, Juan Luis & Valido, Jorge, 2016. "Does an increase in subsidies lead to changes in air fares? Empirical evidence from Spain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 235-242.
    4. Socorro, M. Pilar & Betancor, Ofelia, 2020. "Air transport subsidies for resident passengers: The unexpected effects on competition," Research in Transportation Economics, Elsevier, vol. 79(C).
    5. Pita, João Pedro & Antunes, António Pais & Barnhart, Cynthia & de Menezes, António Gomes, 2013. "Setting public service obligations in low-demand air transportation networks: Application to the Azores," Transportation Research Part A: Policy and Practice, Elsevier, vol. 54(C), pages 35-48.
    6. 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.
    7. Das, Amit Kumar & Bardhan, Amit Kumar & Fageda, Xavier, 2020. "New regional aviation policy in India: Early indicators and lessons learnt," Journal of Air Transport Management, Elsevier, vol. 88(C).
    8. 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.
    9. Fageda, Xavier & Jiménez, Juan Luis & Valido, Jorge, 2017. "An empirical evaluation of the effects of European public policies on island airfares," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 288-299.
    10. 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.
    11. Antunes, António P. & Santos, Miguel G. & Pita, João P. & Menezes, António G., 2018. "Study on the evolution of the air transport network of the Azores," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 837-851.
    12. Antonio Martínez Raya & Víctor M. González-Sánchez, 2021. "Efficiency and Sustainability of Regional Aviation on Insular Territories of the European Union: A Case Study of Public Service Obligations on Scheduled Air Routes among the Balearic Islands," Sustainability, MDPI, vol. 13(7), pages 1-31, April.

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