Deregulation was a first
factor in determining the philosophy of low cost airlines to look at other options for starting
operations from secondary airports.
For example, the most mature route deregulation, Dublin–London, could not have happened at
a Heathrow monopoly in 1986.The new market entrant, Ryanair, did not have access to slots
there. Luton airport was thus an indispensable part of deregulation as was Stansted
subsequently. (Barrett 2004)
Before the discussion moves into the LCC requirements from airports, specifically airport
terminals, the relationship between the airlines and the airports deserves a special mention.
Traditionally, the contract between airlines and airport stated the conditions of use of airport
facilities and services in exchange for the aeronautical fees paid by the airlines. (Graham 2003)
A simple buyer-seller relationship existed. (Albers et al. 2005) As shown in Figure, airports
viewed airlines as their primary customers (Francis et al. 2004); (Graham 2003) The intention of
obtaining revenues from the passengers was almost non – existent as the idea was still very
nascent and also due to the initial thought process of including the passengers as part of the
airline business. (Francis et al. 2004) As a result, airports relied heavily on aeronautical
revenues (Francis et al. 2004) slowly realized and argued that the airline-airport relationship was
gradually becoming more complex as airlines are increasingly cost minded for the sake of their
own financial performance, as a result, aeronautical charges are under increasing scrutiny from
airlines. (Graham 2003) This situation is more prevalent in the case of LCC. Many LCCs are
attempting to negotiate a better deal in aeronautical charges from airports. Some airports,
particularly those that are not utilized to its full extent, are willing to offer discounts to LCCs
(Barrett 2004) or even waive their landing fee for the first few years. (Graham 2003) Now in
order to compensate the loss of aeronautical charges, airports must find new source of income,
while non-aeronautical incomes from concessions, tenants and visitors are the most readily
available source of revenues to airports. (Francis et al. 2004)
As for the LCC requirements from the airports and airport terminals, there has been enough
research done on this aspect to give a good indication of where things stand at the moment.
That includes requirements such as -
I. low airport charges [(Barbot 2006);(Barrett 2004);(Graham 2003);(Francis et al.
2004);(Warnock-Smith & Potter 2005)];
II. quick turnaround time [(Barrett 2004);(Gillen & Lall 2004); (Warnock-Smith & Potter
2005)];
18
III. spare airport capacity [(Warnock-Smith & Potter 2005)];
IV. convenient slot times [(Warnock-Smith & Potter 2005)];
V. single storey airport terminals [(Barrett 2004); (Francis et al. 2004)]
VI. quick check-in [(Barrett 2004)]
VII. good catering at airport [(Barrett 2004)]
VIII. good shopping at airport [(Barrett 2004)]
IX. good facilities for ground transport high potential demand for LCC services and
no gold-plating facility [(Barrett 2004)]
So, as can be seen the traditional way of negotiations with the airports for an LCC is very
straightforward and basic.
LCCs usually avoid expenditures on services that are not strictly necessary for the provision of
the core air transport product, such as the use of air bridges or escalators, the need for transfer
and complex systems of the NCs. (Njoya & Niemeier 2011)
With regard to the implications for airports, (Barrett 2004) is of the opinion that low cost and
smaller secondary airports (i.e. those accommodating 0.5–5 million annual passengers) have
been greatest beneficiaries of low-cost carriers' growth over the last two decades. LCCs
triggered new demand and even shifted traffic away from congested airports to regional
airports