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

Florian Thomas Olischer and Christoph Dörrenbächer

No 73, Working Papers from Berlin School of Economics and Law, Institute of Management Berlin (IMB)

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.

Date: 2013
New Economics Papers: this item is included in nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:imbwps:73

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