Airport Incentive Programmes: A European Perspective
This study investigates the current pricing practices at 200 airports in the European Union (EU). The analysis shows that airport incentive programmes, which are used in one-third of all airports, are generally a common tool of airport pricing. This study also finds evidence of bilateral agreements between airport operators or regional authorities, on the one hand, and airlines, on the other hand, that substitute for published incentive programmes. Geographically, the usage of these different tools varies substantially between different EU countries. A detailed assessment of the incentive schemes offered at German airports within our broader European sample reveals that the average level of landing and take-off, parking and positioning, and passenger charges is generally reduced by more than 10%. The highest reduction amounts to 44%. Given the usually low profit margin of airlines and that airport charges account for up to 10% of the total operating costs, these incentives can have an important influence on the economic viability of a route. Moreover, in an airline's multi-criteria-based assessment of potential market entries or route expansions, such incentive schemes might compensate for selected weaknesses of an airport's strategic position.
Volume (Year): 32 (2012)
Issue (Month): 4 (April)
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