Low-Cost Airports for Low-Cost Airlines
By Kevin
Geneva airport plans to charge budget airlines smaller fees than standard airlines.
Low-cost travellers would have taxes reduced to SFr14 ($11) while others would see the rate upped by SFr3 to at least SFr19.But this is NOT price discrimination; instead airport authorities justify it as cost allocation. The low-cost terminal will be inexpensively remodeled, and the savings will be passed onto the low-cost airlines.The move is designed to cement Geneva’s position as a hub for budget airlines, which are continuing to capture a larger share of the market.
Naturally, entrenched interests do not like this one bit:
Despite the claim, airlines such as Air France, KLM and Lufthansa have cried foul.The "unfair competition" line will be a tough sell to anybody trained in standard price theory.The three traditional carriers, which account for about 20 per cent of all passenger traffic at Geneva, said that the two-tier fee system grants low-cost carriers an unfair competitive edge.
“It’s very apparent that this is a solution designed to suit easyJet,” Werner Kellerhals of Lufthansa told the "Tribune de Genève".
The airport jointly produces standard and budget airline flights; if its managers can demonstrate that budget airlines are cross-subsidizing larger airlines, I don't think there's an easy way to stop the airport from charging different prices.
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