Low-cost airlines,secondary airports,and state aid: An economic assessment of the Ryanair–Charleroi Airport agreement |
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| Affiliation: | 1. Università della Valle d’Aosta, Italy;2. CERTeT-Università Bocconi, Italy;3. Università di Pavia, Italy;4. Keele University, UK;5. Rimini Centre Economic Analysis, Italy;1. College of Business and Administration, University of New Orleans, New Orleans, LA 70148, USA;2. Robert H. Smith School of Business, University of Maryland, College Park, MD 20742, USA;1. Frenkova 3, SI-6280, Ankaran, Slovenia;2. University of Ljubljana, Faculty of Civil and Geodetic Engineering, Jamova cesta 2, SI-1000, Ljubljana, Slovenia;3. Universita di Trieste, Dipartimento di Scienze Ecomoniche, Aziendali, Matematiche e Statistiche (DEAMS), Via Velerio 4/1, IT-34127, Trieste, Italy;4. University of Primorska, Faculty of Tourism Studies – Turistica, Obala 11a, SI-6320, Portorož, Slovenia;1. Faculty of Business Administration, Osaka University of Commerce, 4-1-10 Mikuriyasakae-machi Higashiosaka, Osaka, 577-8505, Japan;2. Institute for Transport Studies, University of Leeds, Institute for Transport Studies, 34-40 University Road, University of Leeds, Leeds, LS2 9JT, UK;3. Graduate School of Maritime Sciences, Kobe University, 5-1-1, Fukaeminami-machi, Higashinada-ku, Kobe, 658-0022, Japan |
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| Abstract: | This paper builds a vertical differentiation model to analyse the effects of subsidies, or lower aeronautical charges, for secondary airports on competition between low cost and full scheduled carriers. The Ryanair–Charleroi Airport agreement in Europe is used as an example and as a basis for the model. The main findings are that subsidization or lower airport charges benefit consumers and negatively affect incumbent airlines. However, they may be more affected by competition than by the subsidy. An empirical analysis provides a few insights on the influence of dominating airports in Ryanair fares. We conclude that this airline sets lower fares when flights depart from or arrive at dominated airports. |
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