Low Cost Carriers and Airports Performance: Empirical Evidence from a Panel of UK Airports

Anna Bottasso, Maurizio Conti and Claudio Piga

Working Paper series from Rimini Centre for Economic Analysis

Abstract: During the last decade, the proliferation of Low Cost Carriers and the related huge increase in traffic has been the most visible effect of the deregulation of the airline market in Europe. Little attention has been paid to how airports were affected by the changes in the new institutional environment. In this study we model the total factor productivity (TFP) for a panel of the UK largest airports over the 2002-2005 period and investigate whether the presence of LCCs has some impact on airports' TFP. Empirical results are consistent with the hypothesis that conspicuous entry of LCCs on European markets has impacted positively on the vertical chain by facilitating airports' productivity improvements. This result is robust to reverse causality issues associated with the possibility that most efficient airports are those that are more likely to attract LCCs. Different possible arguments may explain our results: traffic increases brought about by LCCs for a given installed capacity might have generated higher TFP; more efficient organizational models might have been adopted to meet LCCs operational requirements (short turnaround times); cost reductions might have been realized in order to lower charges and attract LCCs; competition from a larger number of airports induced by LCCs' wider catchment areas (with respect to full service airlines) might have exerted further pressure toward TFP improvements.

Keywords: Total Factor Productivity; Airports; LCCs (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-com, nep-eff, nep-eur and nep-tur
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Citations: View citations in EconPapers (8)

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Journal Article: Low-cost carriers and airports' performance: empirical evidence from a panel of UK airports (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:48_11

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