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Low-cost carriers and airports' performance: empirical evidence from a panel of UK airports

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  • Anna Bottasso
  • Maurizio Conti
  • Claudio Piga

Abstract

During the past decade, the proliferation of low-cost carriers (LCCs) 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 largest airports in the UK over the 2002--2005 period and investigate whether the presence of LCCs had 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 the 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 to lower charges and attract LCCs; and 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. Copyright 2013 The Author 2012. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Anna Bottasso & Maurizio Conti & Claudio Piga, 2013. "Low-cost carriers and airports' performance: empirical evidence from a panel of UK airports," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(3), pages 745-769, June.
    • Handle: RePEc:oup:indcch:v:22:y:2013:i:3:p:745-769
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    File URL: http://hdl.handle.net/10.1093/icc/dts033
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    Cited by:

    1. Malighetti, Paolo & Paleari, Stefano & Redondi, Renato, 2016. "Base abandonments by low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 234-244.
    2. Fabio Carlucci & Andrea Cirà & Paolo Coccorese, 2018. "Measuring and Explaining Airport Efficiency and Sustainability: Evidence from Italy," Sustainability, MDPI, vol. 10(2), pages 1-17, February.
    3. Augustyniak, Wojciech & López-Torres, Laura & Kalinowski, Sławomir, 2015. "Performance of Polish regional airports after accessing the European Union: Does liberalisation impact on airports' efficiency?," Journal of Air Transport Management, Elsevier, vol. 43(C), pages 11-19.
    4. Ante Mandić & Marijana Teklić & Lidija Petrić, 2017. "RThe effects of the low cost carriers' presence on airport performance: evidence from Croatia," Tourism and Hospitality Management, University of Rijeka, Faculty of Tourism and Hospitality Management, vol. 23(1), pages 17-34, May.
    5. Bottasso, Anna & Conti, Maurizio & Vannoni, Davide, 2019. "Scale and (quasi) scope economies in airport technology. An application to UK airports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 125(C), pages 150-164.
    6. Choo, Yap Yin & Oum, Tae Hoon, 2013. "Impacts of low cost carrier services on efficiency of the major U.S. airports," Journal of Air Transport Management, Elsevier, vol. 33(C), pages 60-67.
    7. Button, Kenneth & Kramberger, Tomaž & Grobin, Klemen & Rosi, Bojan, 2018. "A note on the effects of the number of low-cost airlines on small tourist airports' efficiencies," Journal of Air Transport Management, Elsevier, vol. 72(C), pages 92-97.
    8. Pacagnella, Antônio Carlos & Hollaender, Paulo Sodre & Mazzanati, Giovanni Vitale & Bortoletto, Wagner Wilson, 2021. "Efficiency drivers of international airports: A worldwide benchmarking study," Journal of Air Transport Management, Elsevier, vol. 90(C).
    9. Anna Bottasso & Martina Bruno & Maurizio Conti & Claudio Piga, 2017. "Competition, vertical relationship and countervailing power in the UK airport industry," Journal of Regulatory Economics, Springer, vol. 52(1), pages 37-62, August.
    10. Martini, Gianmaria & Scotti, Davide & Viola, Domenico & Vittadini, Giorgio, 2020. "Persistent and temporary inefficiency in airport cost function: An application to Italy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 999-1019.

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