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Concession Bargaining in the Aviation Industry

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Florian Thomas

on 30 November 2016

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Transcript of Concession Bargaining in the Aviation Industry

Concession Bargaining
in the Aviation Industry
- Airlines vs Airports -

Distribution of Market Power?
Airline vs. Airport (in Europe)
Threats of Relocation/Withdrawal
within the European Union
Low-Cost Airline can beat Secondary Airport
State of Research in Aviation
© Florian Olischer
Airline vs. Airline
e.g. Legacy vs. Low-Cost, Legacy vs. Legacy,
Low-Cost vs. Low-Cost
Airport vs. Airport
Something missing?
Airline vs. Airport?
e.g. Hub vs. Secondary, Hub vs. Hub,
Secondary vs. Secondary
2nd Young Scholar in Residence Speech - November 30th, 2016
@ Berlin Institute for International Business Studies / HWR Berlin

27
2
1
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6
x
3
x
1
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4
x
2
x
10
x
2

x
Private Sphere
Public Sphere
European Union
~ 800 Airports suitable for B-737 / A-320
e.g. size of Germany
(360.000 km² --> Ø 60 Airports)

(Germany has a total of 320 airports, of which 110 are suitable for B-737 / A-320)
> Excess of Supply
"Enabler" of Power favouring Airlines
> Airlines mobile, Airports not
> Excess of Supply leads to airport competition
> Decentral Politics concerning Infrastructure
> "Dependent Contracting" by Airports
> Relative ease of Relocation/Withdrawal (§§)
(despite uncertainty about catchment areas)
"Market-Power-Hierarchy" in (low-cost) Aviation
Governments (e.g. APD, taxation)
Airlines (Relocation, Withdrawal)
Secondary Airports
> Thank you for your attention and participation <
150 km
1
x
1
x
Causes for Relocations / Withdrawals by LCCs in Europe
(according to Airlines)
Cause
No. of incidents
Taxes

Subsidies

Airport fees

No. of Pax

Infrastructure
10

7

6

5

2
Analysis of the 30 cases found
Executed?
No = 2 cases

Yes = 28 cases
(R 12; W 16)
From Altenburg (Thuringia) to Cochstedt (Saxony-Anhalt)

(executed by Ryanair
due to Airport fees)
Extent of Relocations / Withdrawals by LCCs
Extent
No. of incidents
unknown

1-33 %

34-66 %

66-99 %

Withdrawal (100 %)
2

4

1

5

16
(Hahn & Weeze)
Not executed

What happened
?
What happened
?
Agenda
1. Hello & Who is this guy? (5`)
2. Warm-Up / Short Quiz (10')
3.
Interactive
Presentation (45')
4. Questions & Answers / Discussion (30')

Goal:

you think like an Airline-CEO and/or
an politician in the middle of nowhere.
Goal-Check:
Did
you think like an Airline-CEO and/or
an politician in the middle of nowhere?
Stephen Kobrin:

"Today governments
are not
the
sovereign
actor anymore, they
are
a
sovereign actor."
Conclusion: The liberalisation of the Aviation Industry has
arguably increased the need for regulation.
Full transcript