State Aids Granted by Regional Airports: A Two-sided Market Analysis

A lot of cases had arouse in the past decade about agreements between regional airports and low-cost carriers. These agreements are challenged on the basis of the State Aids European control as they rise concerns not only about competition distortions between airlines but also about fiscal competition risks among Member States or local governments. Such phenomena could be expected as regional airports are characterized by significant overcapacities and overlapping inducing a substitutability for airlines. Surprisingly, the new 2014 guidelines on State Aids granted to airlines open the way to transitory operating aid schemes, an option apparently at odds with the European longstanding principles. The purpose in this paper is to demonstrate with the help of the development of a model, that such agreements can make sense from the economic point of view provided that the relationship between the carrier and the airport is no longer analyzed as a vertical chain, inducing an assessment in terms of economic dependence, but as a two-sided market. The favorable usage terms granted to low cost carriers generate additional flows on the other side, with commercial revenues from shops or parking. Consequently, subsidizing operating costs might be rational, even for a private investor in a market economy, and might be a perennial device.

• Record URL:
  https://doi.org/10.1016/j.trpro.2017.05.195
• Record URL:
  http://www.sciencedirect.com/science/article/pii/S2352146517304933
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/23521465
• Supplemental Notes:
  • © 2017 Estelle Malavolti and Frédéric Marty. Published by Elsevier B.V.
• Authors:
  • Malavolti, Estelle
  • Marty, Frédéric
• Conference:
  • World Conference on Transport Research - WCTR 2016
  • Location: Shanghai , China
  • Date: 2016-7-10 to 2016-7-15
• Publication Date: 2017

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References;
• Pagination: pp 30-40
• Serial:
  • Transportation Research Procedia
  • Volume: 25
  • Issue Number: 0
  • Publisher: Elsevier
  • ISSN: 2352-1465
  • Serial URL: http://www.sciencedirect.com/science/journal/23521465/
• Publication flags:

  Open Access (libre)

Subject/Index Terms

• TRT Terms: Airport capacity; Airport operations; Competition; Low cost carriers; Market assessment; Regional airlines; Risk assessment; State aid
• Geographic Terms: Europe
• Subject Areas: Aviation; Finance; Operations and Traffic Management;

Filing Info

• Accession Number: 01642214
• Record Type: Publication
• Files: TRIS
• Created Date: Jun 13 2017 3:00PM