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Concession bargaining in the airline industry: Ryanair's policy of route relocation and withdrawal

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  • Olischer, Florian Thomas
  • Dörrenbächer, Christoph

Abstract

This paper examines the European low-cost airline industry by analysing how the rise of low-cost carriers (LCCs) has influenced the relationship between airlines and airports. Publicly funded infrastructure is a necessary precondition for any business, and utilization charges are an important cost issue for firms, especially in the transportation industry. While cost cutting is an integral part of every business model, LCCs excessively focus on low costs, with airport charges being an important target for cost cutting measures. In order to drive down airport charges and shape airport services to fit its low cost business model, Ryanair has threatened to relocate and/or withdraw routes several times. This paper looks into such processes of concession bargaining and aims to uncover how LCCs put themselves into the position to gain a degree of market power, which make them important actors shaping the macro-political system around the aviation industry.

Suggested Citation

  • Olischer, Florian Thomas & Dörrenbächer, Christoph, 2013. "Concession bargaining in the airline industry: Ryanair's policy of route relocation and withdrawal," Working Papers 73, Berlin School of Economics and Law, Institute of Management Berlin (IMB).
    • Handle: RePEc:zbw:imbwps:73
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    1. Birkinshaw, Julian & Braunerhjelm, Pontus & Holm, Ulf & Terjesen, Siri, 2006. "Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?," Working Paper Series in Economics and Institutions of Innovation 54, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    2. Rugman, Alan M. & Brewer, Thomas L. (ed.), 2001. "The Oxford Handbook of International Business," OUP Catalogue, Oxford University Press, number 9780199241828.
    3. Pate, J.M. & Beaumont, P.B., 2006. "The European Low Cost Airline Industry:: The Interplay of Business Strategy and Human Resources," European Management Journal, Elsevier, vol. 24(5), pages 322-329, October.
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    Cited by:

    1. Warmdt, Luca & Užik, Martin & Löcher, Markus, 2018. "Financial signaling with open market share repurchases and private redemptions," Working Papers 93, Berlin School of Economics and Law, Institute of Management Berlin (IMB).
    2. 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.

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