THE EVOLUTION OF THE AVIATION SECTOR TOWARDS CONTESTABILITY AMONGST AIRPORTS

Abstract

The aviation sector has undergone fundamental transformation in recent years. Liberalisation of the European and US skies alongside the emergence of competitive, innovative low-cost airlines has resulted in a radically new aviation market defined by efficiency, productivity and competitive practices. The consequences of these improvements have had far reaching effects. Air travel is no longer reserved for the privileged few who could afford the inordinately expensive flights of the previous era, and the destinations available to consumers have multiplied greatly to include every corner of the world. This is a radical departure from the historically costly and inefficient aviation sector of the previous forty years, which had opted out of ‘normal market economics’. A combination of reduced airfares and a more efficient, productivity-orientated outlook from airlines has greatly affected the role of airports. Airlines are now price sensitive; airports can no longer charge rates in the knowledge that airlines will simply pass on the added cost to passengers. A competitive market has emerged among airports as a result of deregulation and increased scrutiny by airlines of the cost structure within airports. The dominance of the traditional hub airports during the previous era has been eroded; low cost airlines have taken an innovative approach to air travel and have chosen to base their activities in cost conscious ‘peripheral’ airports within an hour or two of the most popular European cities via ground transport. Ryanair notoriously started this trend by using airports such as Beauvais, Charleroi, and