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Airport incentive programs: A European perspective

Author

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  • Malina, Robert
  • Albers, Sascha
  • Kroll, Nathalie

Abstract

In this paper we investigate current pricing practices at the 200 biggest airports in the European Union. Our analysis shows that airport incentive programs are, in general, a common tool of airport pricing as they are used at one third of all airports. We also find evidence on the presence of bilateral agreements between airport operators or regional authorities on one side and airlines on the other side which serve as a substitute for published incentive programs. Geographically, usage of the 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%, at smaller airports even by up to 44%. Given the usually low profit margin of airlines and that airport charges account for up to 10% of 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 selected weaknesses of an airport's strategic posture.

Suggested Citation

  • Malina, Robert & Albers, Sascha & Kroll, Nathalie, 2011. "Airport incentive programs: A European perspective," Working Paper Series 107, University of Cologne, Department of Business Policy and Logistics.
  • Handle: RePEc:zbw:ucdbpl:107
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    1. repec:eee:jaitra:v:66:y:2018:i:c:p:65-75 is not listed on IDEAS
    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. repec:gam:jsusta:v:9:y:2017:i:8:p:1295-:d:105757 is not listed on IDEAS
    4. repec:eee:touman:v:65:y:2018:i:c:p:237-244 is not listed on IDEAS
    5. Allroggen, Florian & Malina, Robert & Lenz, Ann-Katrin, 2013. "Which factors impact on the presence of incentives for route and traffic development? Econometric evidence from European airports," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 60(C), pages 49-61.
    6. Estelle Malavolti & Frédéric Marty, 2017. "State Aids granted by regional airports: a two-sided market analysis," Post-Print halshs-01538698, HAL.
    7. Ramos-Pérez, David, 2016. "State aid to airlines in Spain: An assessment of regional and local government support from 1996 to 2014," Transport Policy, Elsevier, vol. 49(C), pages 137-147.
    8. Núñez-Sánchez, Ramón, 2015. "Regional public support to airlines and airports: An unsolved puzzle," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 93-107.
    9. Wittman, Michael D., 2014. "Public funding of airport incentives in the United States: The efficacy of the Small Community Air Service Development Grant program," Transport Policy, Elsevier, vol. 35(C), pages 220-228.
    10. repec:eee:touman:v:46:y:2015:i:c:p:213-221 is not listed on IDEAS
    11. Klein, Klemens & Albers, Sascha & Allroggen, Florian & Malina, Robert, 2015. "Serving vs. settling: What drives the establishment of low-cost carriers’ foreign bases?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 79(C), pages 17-30.
    12. Allroggen, Florian & Wittman, Michael D. & Malina, Robert, 2015. "How air transport connects the world – A new metric of air connectivity and its evolution between 1990 and 2012," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 184-201.
    13. repec:eee:transa:v:106:y:2017:i:c:p:116-129 is not listed on IDEAS

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    Keywords

    Air Transport; Airports; Pricing; Management; Regulation;

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