Airports' perspectives on the growth of low-cost airlines and the remodeling of the airport-airline relationship

This paper explores the way in which airports have responded to the apparent opportunities afforded them by the growth of low-cost airlines. The adoption of a so-called low-cost model by airlines has made many airports fundamentally reconsider who their customers are. The low-cost model impels airlines to negotiate contracts which significantly reduce aeronautical charges by the airport, consequently seeking to make up this short fall by commercial revenues from the increased passenger numbers. This is not however without consequences for the airports, their passengers and the relationship between the airport and its existing airline operators. The recent growth of low-cost airlines has naturally attracted the attention of airport managers as a source of volume to alleviate commercial pressures; however, due to low-cost airlines' unwillingness to pay high airport fees there is the difficulty of translating any increased volume of passengers into increased revenue. This paper reviews the behaviour of a number of different airports in Europe and identifies important issues for airport management to consider when negotiating with low-cost airlines. (C) 2003 Elsevier Ltd. All rights reserved.