Issue 48

Beware of the Middleman – How to Deal with Travel Agents from an Airline and Customer Perspective

By Ralf Vogele

When the scientific fathers of the new institutional economics developed the theories around the Principal-Agent Problem (Akerlof 1970), they focused more on markets such as fruits, cars and insurances rather than on the travel industry, though which they certainly would have looked at today if they had to reinvent those theories. This paper aims to illustrate the problems associated with the relationship between airlines, travel agents and customers, according to the Principal-Agent theory. Examples will be covered of real-life situations where elements of the Principal-Agent theory can be observed. In addition, airline professionals, students and other interested readers will gain a general understanding of the Principal-Agent theory. Finally, suggestions are given for coping with the general drawbacks of a principal, when dealing with (travel) agents.

Embeddedness and Experimentation at Paris Orly and Amsterdam Schiphol
By Veronique Galvin

GalvinWhile most international airports are broadly recognized as strategic territories within their metro areas, Amsterdam stands out as an international example of coherent development in Europe. Orly is Paris’ second and oldest international airport, specialized in cargo and the French domestic market. Local stakeholders in Paris tried to define a coherent land strategy, taking into account numerous actors and territories, taking Schiphol as a possible reference study. Although both of them are quite different types of airports (one is a domestic and cargo airport, the other an international hub), in terms of managing spatial development in the densely built urban areas, a relevant comparison can be made, and lessons can be learned.

FAST: Future Airport Strategies

By Isabelle Laplace et al

future_airport_strategyAlthough airline strategies will be the main drivers of traffic evolution, the airports are by no means passive, and their own strategies will have an impact on airline behavior and route development. The FAST project methodology analyzes the potential evolution of airport strategies in the next decade according to a typology of airports that was designed for this purpose. It also analyses the potential impacts of future strategies on traffic distribution at airports.

Determinants of an Airport Productivity Benchmark

By Branko Bubalo

branko_bubaloToday’s airports are expansive and expensive infrastructures with considerable impact on population and the environment. In the past, we have seen almost unconstrained exponential growth of air transportation in the Western world, which has been fueled by deregulation and partial privatization of air transportation in the U.S. and in Europe. Today, North-American and European markets as well as major routes have matured considerably. Therefore, future growth of demand will happen in the Asian and in the Middle-Eastern markets, simultaneous with increasing wealth, consumption, and education. Having a functional and efficient infrastructure is essential for future growth in all economies. The European market will not stagnate at the current level; Europe will continue to serve as a gateway between the Americas and Asia, and it will grow, on average, at a comparably lower rate. There will be considerable growth at Eastern European airports. This results in a doubling of traffic or passengers in the next 16 to 20 years, putting currently congested airports under enormous pressure. The question for European institutions and policy is: Do European airports have the capacity to serve future demand or will there be a widening capacity gap?

Two New European Directives on Airport Charges: Airport Charges between Competition Law and Sector-Specific Regulation

By Jochen Meulman

In the past year, the European Communities’ legislative adopted a Directive regulating airport charges; meanwhile, a proposal for a Directive on airport security charges was submitted for approval by European Parliament and the Council of Ministers. Although in many economic sectors in which third-party access to infrastructure is essential, access charges have been regulated at the EU level, airport tariffs had so far escaped direct and general European legal scrutiny. Indirectly, and on a case-by-case basis however, airport charges have been the subject of the EU’s attention, mainly in cases in which such charges were suspect from the view of European competition law. Now, finally, a common legal framework for setting airport charges has been devised, which will – at the very least – render such charges and the procedures leading up to their determination more transparent. Whether lower tariffs for the use of airport-related services will ensue from this new regulation, will be discussed in this contribution. After a brief description of the background to airport tariffs and their regulation under EU competition law hitherto, this contribution will identify denominators common to both mentioned directives. Next, both directives and their impact on airport charges will be discussed, with a focus on their overlap with EU competition law. Finally, two questions will be answered; (1) to what extent do EU competition law and the new Directives overlap? (2), will the new legislation lead to lower charges for airport users?

money suitcaseGermany is introducing in January 2011 an aviation tax (luftverkehrsabgabe). Germany is not the first nor will it probably be the last to introduce a Ticket Tax. Other countries abolished it recently. What are the chances for the German Ticket Tax ? The UK introduced an APD (Air Passenger Duty Tax) back in 1994. The tax was gradually raised and differentiated towards distance. At this moment the tax is 11 Pounds for a short haul flight (< 2000 miles) and 55 Pounds for a long haul flight (>6000 miles). From November 2010 the rates will be lifted to 12 – 85 Pounds. Non-economy tickets pay the double.

Balancing International with Domestic Priorities by Allan Williams


Book Review by Angela Cheng-Jui Lu

While China is gradually growing into one of the world’s economic superpowers, it faces issues in political, economic and social reform as well as challenges domestically and internationally. This book gives an overview of China’s political, market and national administrative reforms, organizational problems, and competitive market uncertainties with a focus on the development of China’s civil aviation industry.

Aeropolitics – Transportation Issues, Policies and R&D Series
Book Review by: Erwin von den Steinen

Aeropolitics, by Professor Dr Ruwantissa Abeyratne, is a both a provocative and demanding book. In a way, it is three books in one. That is, there is the stated theme that defines ‘aeropolitics’ as the governance processes of air transport to be viewed from a global perspective, including consideration of the increasing impact of transnational interests and stakeholders on policy formulation and execution. Second, it is an extensive and intensive review of the functioning of the International Civil Aviation Organization (ICAO), for whom the author has served in executive capacities. Third, there is a large number of diverse issue discussions, some of which could be termed mini-case studies.

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