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Privatization, Commercialization and Deregulation of Airports

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Privatization, Commercialization and Deregulation of Airports
TOPIC:
Privatization, commercialization and deregulation of airports – incentives for airport to compete and maximize profits. Increasing importance of airport concession revenue – affects performance of different airport regulations, and leads to evolving vertical relationships.
As competition in the airline market intensifies, airport-airline relationship becomes increasingly important. Discuss the impacts of airports on airline competition – focus on airport performance and airline-airport relationship.

INTRODUCTION:
In the topic below we are going to discuss what incentives an airport needs to compete and maximize profits. Also we will discuss the increasing importance of airport concession revenue and the affects of performance of different airport regulations which would lead to evolving vertical relationships. Also we will discuss how airport-airline relationship becomes increasingly important as competition in the airline market intensifies. We will discuss the impacts of airports on airline competition and focus on airport performance and airline-airport relationship.
Airport performance and airline-airport relationship:
The impacts of airports on airline competition may consist of a supply of services an airport can offer both tangible and intangible to meet the needs of airline customers. A customers decision on choice of airport or airline can be divided into three:
Core: the essential benefit that is offered.
Actual: the features that deliver the benefit.
Augmented: additional services/benefits that distinguishes the product from others. Most competition takes place at the augmented level. Research find that access time and flight frequency are the two main determinants of airport choice. But they also find that the importance of these two variables differs according to traveller’s and trip characteristics. In particular, individuals travelling alone and women are more sensitive to access time. Hess and Polack (2006)
Airports that have


References: http://www.tgl.ufrj.br/viisitraer/pdf/384.pdf retrieved on 14Feb 2012 http://userpage.fu-berlin.de/~jmueller/gapprojekt/downloads/WS_dec_10/Volkova.pdf retrieved on 14Feb 2012
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