A review of the airport-low cost airline relationship

The so called low cost model has proved to be financially and operationally robust for a number of short haul airline operations in various regions world-wide and airports have responded to the potential opportunities that have arisen by the growth of low cost airlines. The low cost model has implications however for the airline-airport relationship. The low cost model has forced airports to negotiate contracts which significantly reduce aeronautical revenues whilst seeking to address this short fall by commercial revenues via increased passenger numbers. Airports have sometimes found it difficult to turn increased passenger volume into additional revenue. This paper seeks to review the airport-airline relationship in the light of the growth in the low cost sector, identifying important issues that airport management should consider when negotiating with low cost airlines.