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State Aids granted by regional airports: a two-sided market analysis

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  • Estelle Malavolti

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, ENAC - Ecole Nationale de l'Aviation Civile)

  • Frédéric Marty

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

Abstract

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. Our 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.

Suggested Citation

  • Estelle Malavolti & Frédéric Marty, 2016. "State Aids granted by regional airports: a two-sided market analysis," Post-Print halshs-01538698, HAL.
    • Handle: RePEc:hal:journl:halshs-01538698
    DOI: 10.1016/j.trpro.2017.05.195
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01538698
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    References listed on IDEAS

    as
    1. Robert Malina & Sascha Albers & Nathalie Kroll, 2012. "Airport Incentive Programmes: A European Perspective," Transport Reviews, Taylor & Francis Journals, vol. 32(4), pages 435-453, April.
    2. Estelle Malavolti & Frédéric Marty, 2013. "La gratuité peut-elle avoir des effets anticoncurrentiels ? Une perspective d'économie industrielle sur le cas Google," Post-Print halshs-00903346, HAL.
    3. Estelle Malavolti & Frédéric Marty, 2010. "Analyse économique des aides publiques versées par les aéroports régionaux aux compagnies low cost," SciencePo Working papers Main hal-00614952, HAL.
    4. Frédéric Marty, 2005. "Politiques d'attractivité des territoires et règles européennes de concurrence. Le cas des aides versées par les aéroports aux compagnies aériennes," Revue de l'OFCE, Presses de Sciences-Po, vol. 94(3), pages 97-125.
    5. Hugues Bouthinon-Dumas & Frédéric Marty, 2013. "Les fonds publics d'investissement stratégique à l'épreuve du contrôle européen des aides d'Etat," Post-Print halshs-00909242, HAL.
    6. Fu, Xiaowen & Homsombat, Winai & Oum, Tae H., 2011. "Airport–airline vertical relationships, their effects and regulatory policy implications," Journal of Air Transport Management, Elsevier, vol. 17(6), pages 347-353.
    7. Estelle Malavolti, 2014. "Single Till or Dual Till at Airports: a Two-Sided Market," GREDEG Working Papers 2014-46, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
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    Keywords

    air transport economics; state aids; two-sided market;
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