Effects of deregulation on airports?
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Effects of deregulation on airports?
Hi all,
I was wondering if anyone could give me some thoughts or good ideas about the effects of deregulation on airports.
Also, could anyone explain to me the main reasons British Airways pulled out of Manchester/Birmingham in 2007.
I am studying for an upcoming exam, and any help would be appreciated. Thanks!
I was wondering if anyone could give me some thoughts or good ideas about the effects of deregulation on airports.
Also, could anyone explain to me the main reasons British Airways pulled out of Manchester/Birmingham in 2007.
I am studying for an upcoming exam, and any help would be appreciated. Thanks!
If you look at the US the effect has been very significant. The airlines moved towards hubs and cities competed to attract them. With exceptions such as Denver & Chicago a dominant carrier could account for 80% of all passengers and 70% of these could be transfer Consider Pittsburg. The number of passengers increased significantly as US Airways established a major hub and then dropped rapidly when they closed it and shifted resources to other hubs. This has been true of many other cities - Memphis, Cincinnati and Saint Louis to name just three.
In the US gates are often leased to individual airlines and new airlines can have problems acquiring gates. I think that there are only four U.S. airports with slot restrictions.
In Europe the legacy airlines have always tended to operate out of a hub at the national capital of major city such as Frankfurt so the effect is less, although cities where a national carrier goes under suffer. (Zurich had some lean years when Swissair went out.) However the low cost carriers are very different, operating as transnational companies continually adding and dropping routes. Ryanair is the best example. They will happily play airports off against each other and have negotiated very favourable terms from under utilised airports. The European Commission have investigated and found that airports have undercharged FR - as they were desperate for their business. (They try and recoup it with charges such as drop off fees, fast track security, extortionate charges for bottles of water, etc). I would not want to be the manager of a small airport with Ryanair as the main customer.
A good book to read is Managing airports, an international perspective by Anne Graham ISBN: 9780750648233.
The reason that BA pulled out of Manchester & Birmingham in 2007 was yield - fares weren't high enough and they were making a loss. BA was (and still is) a relatively high cost operator (Alex Cruz may have other ideas) but it gets a lot of high yield traffic out of Heathrow with its huge amount of business traffic. Infrastructure constraints limited competition. (BA don't want a third runway.) Yields out of MAN/BHX were much lower. The only way that BA could compete was by lowering its costs. This was difficult although it was always trying to cut the cost of regional staff and it couldn't match those of smaller airlines. It therefore shifted its resources to more profitable routes. Lufthansa is using lower cost subsidiaries out of German airports other than Frankfurt & Munich.
In the US gates are often leased to individual airlines and new airlines can have problems acquiring gates. I think that there are only four U.S. airports with slot restrictions.
In Europe the legacy airlines have always tended to operate out of a hub at the national capital of major city such as Frankfurt so the effect is less, although cities where a national carrier goes under suffer. (Zurich had some lean years when Swissair went out.) However the low cost carriers are very different, operating as transnational companies continually adding and dropping routes. Ryanair is the best example. They will happily play airports off against each other and have negotiated very favourable terms from under utilised airports. The European Commission have investigated and found that airports have undercharged FR - as they were desperate for their business. (They try and recoup it with charges such as drop off fees, fast track security, extortionate charges for bottles of water, etc). I would not want to be the manager of a small airport with Ryanair as the main customer.
A good book to read is Managing airports, an international perspective by Anne Graham ISBN: 9780750648233.
The reason that BA pulled out of Manchester & Birmingham in 2007 was yield - fares weren't high enough and they were making a loss. BA was (and still is) a relatively high cost operator (Alex Cruz may have other ideas) but it gets a lot of high yield traffic out of Heathrow with its huge amount of business traffic. Infrastructure constraints limited competition. (BA don't want a third runway.) Yields out of MAN/BHX were much lower. The only way that BA could compete was by lowering its costs. This was difficult although it was always trying to cut the cost of regional staff and it couldn't match those of smaller airlines. It therefore shifted its resources to more profitable routes. Lufthansa is using lower cost subsidiaries out of German airports other than Frankfurt & Munich.
The truth is that with the web aggregators the game now is high volume low cost airlines.
Emirates has built its business model on transit passengers who are en route from Europe to the Far East and Australia.
But in all honesty who wants to fly Y with Emirates to Australia or Thailand when there are direct routes for an extra fifty pounds.
I see lots of empty seats on my regular trips from Asia to the UK. That is down to expensive tickets from the likes of Thailand..
Emirates has built its business model on transit passengers who are en route from Europe to the Far East and Australia.
But in all honesty who wants to fly Y with Emirates to Australia or Thailand when there are direct routes for an extra fifty pounds.
I see lots of empty seats on my regular trips from Asia to the UK. That is down to expensive tickets from the likes of Thailand..
