Modern Economy, 2010, 1, 59-67
doi:10.4236/me.2010.12006 Published Online August 2010 (http://www.
Copyright © 2010 SciRes. ME
The Effects of Low Cost Airlines Growth in Italy
Domenico Campisi, Roberta Costa, Paolo Mancuso
Department of Business Engineering, University of Rome Tor Vergata, Via del Politecnico, Rome, Italy
Received May 19, 2010; revised June 28, 2010; accepted July 5, 2010
In recent years, low cost carriers (LCCs) have been the fastest growing sector of the aviation industry. The
routes served by these carriers were undersized in comparison with principal routes, but deregulation made
possible an efficient access to many new markets. The new generation of regional and low cost carriers have
enabled a better matching of capacity to demand on routes previously served solely by large airlines, experi-
encing an increasing role in spatial development. Regional airports impact on local economies directly as a
catalyst for other on-site economic activities and indirectly as a regional economic multiplier. This paper
analyses the relation between LCC passenger traffic, secondary airports utilization and regional economic
development. We underline that increased service at Italian secondary airports could affect economic devel-
opment in the surrounding regions, including increased tourism and the potential for cluster development.
Keywords: Low Cost Airlines, Regional Economic Development, Secondary Airports
1. Introduction
In the present difficult situation for European aviation,
one sector is performing relatively well, the so-called low
cost carriers (LCCs). While flag-carriers are experienc-
ing a severe crisis, withdrawing from routes and cutting
staff, the low cost sector is expanding at a steady rate.
There is concrete evidence that the LCCs could even
become dominant players on a significant number of
intra-European short-haul and point-to-point routes. For
this reasons, the European industry and policy makers
are questioning and investigating the extent to which the
expansion of the LCCs will affect the traditional airline,
characterized by hub-and-spoke networks. It is undeni-
able that airline deregulation has brought better service at
lower prices to the majority of the population and that
LCCs are the driving force behind the benefits of airline
deregulation. It was frequently observed that when a new
LCC enters a market, airfares drop [1].
In Europe, the experience of LCCs began in 1991
when the Irish carrier Ryanair transformed itself from a
conventional regional airline into a carbon copy of the
US low cost pioneer Southwest Airlines. At first, Ry-
anair focused on the large leisure market between Ireland
and UK and in this phase the airline had a striking effect
on services across the Irish Sea. After, Ryanair growth
was the consequence of the strategic building of a net-
work of intra-EU routes linking London’s third airport,
Stansted, with over 50 under-utilized secondary airports
located in a large number of countries. This strategy
made Ryanair one of the largest LCC in Europe. The
second case of success in the European LCCs was repre-
sented by EasyJet, established in 1995, after the acquisi-
tion of its rival Go, a British Airways offshoot. Several
other LCCs have also been established as a reaction to
these successful cases, including Buzz and Bmibaby in
the UK, Virgin Express in Belgium, Transavia and Ger-
manwings in Germany. LCCs have surely enabled a bet-
ter matching of capacity to demand on routes previously
served solely by large airline companies. Their appear-
ance determined a rapid decreasing of airfares and de-
termined the financial crisis of a large number of airline
companies [2]. Moreover, these carriers have been ex-
periencing an increasing role in spatial development [3].
Regional airports impact on local economies both directly
as a catalyst for other on-site economic activities and
indirectly as a regional economic multiplier [4]. This
paper first look at the relation between LLC passenger
traffic, secondary airports and regional economic devel-
opment, then it underlines how the introduction of LCC
service to previously under-served secondary airports
affect the economic development in the surrounding Ital-
ian regions, including increased tourism and the potential
for cluster development. In recent years, theoretical and
empirical studies have identified significant changes in
the distinctive characteristics of clusters and their evolu-
tionary stages. The development of cluster competitive-
Copyright © 2010 SciRes. ME
ness is a function of different traits that from time to time
have characterized their evolution [5]. We will try to
identify in which cases the increased service at Italian
secondary airports, that affected economic development
in the surrounding regions, could possibly favourite a
cluster development.
2. The Market of Low Cost Carriers
In order to analyze the LCC structure and strategy and to
investigate the real profitability and sustainability of the
LCC business model, we adopted the Structure-Conduct-
Performance (SCP) paradigm [6]. The SCP approach
links elements of market structure to business conduct
and performance in industrial economics. In this model,
the market structure (Structure) is defined mainly by
market concentration, number of firms and vertical inte-
gration. The behaviour of firms (Conduct), that could be
collusive or competitive, depends strictly on pricing, cost
structure of the firms, choice of technology, R & D, ad-
vertising, entry barriers, etc. Performance is mainly de-
fined by the extent of the firm’s market power and it is
measured by profitability, price level and efficiency.
The sample analyzed is formed by 15 LCCs (Table 1)
and is representative of LCCs that serve routes to and
from Italy. In our sample the competition is played be-
tween carriers in the European market, since they serve
only intra-European routes on short and medium dis-
tances. The LCCs were chosen according to the STAT-
FOR documents of Eurocontrol (European Organization
for the Safety of Air Navigation) [7] and they repre-
sented in 2005 about the 70% of the European LCCs,
corresponding to the 80% of the passenger traffic gener-
ated by LCCs in Italy.
Table 1. LCC passenger traffic in 2005 (to and from Italy).
Low cost airlines # passengers market share si
Itali Airlines 113 075 0.18%
SkyEurope 171 000 0.28%
Lauda Air 386 177 0.63%
Blue Air 443 500 0.72%
Bmibaby 821 000 1.34%
Eurofly 1 108 291 1.81%
Volare Web 1 873 429 3.05%
Hapag Lloyd 1 950 000 3.18%
Germanwings 2 395 000 3.90%
Sterling Airlines 2 455 000 4.00%
Virgin Express 2 533 000 4.13%
Flybe 3 386 000 5.52%
Transavia 4 210 000 6.86%
EasyJet 18 153 000 29.58%
Ryanair 21 372 000 34.82%
Total 61 370 472 100%
Source: Eurocontrol, IATA, ICAO, LCC websites, 2006
As stated before, the Structure of a market is described
by market concentration that is a function of the number
of firms in a market and their respective market shares.
We apply the Herfindahl-Hirschman Index (HHI) (1) to
the LCC market shares (Table 1) in order to determine
market concentration in the LCC market.
0.22 0.07
All the data analysed are from Eurocontrol, IATA (In-
ternational Air Transport Association) and ICAO (Inter-
national Civil Aviation Organization) and they refer to
the year 2005 [7-9].
From the analysis of the sample, we observe an evi-
dent disparity in the dimension of the LCCs and the pres-
ence of a great concentration in the LCC market. In fact,
the market is constituted by a small number of large
companies (Ryanair, Easyget) with a combined market
share exceeding 50% and a large number of small and
medium companies characterized by a market share from
7% to less than 1%.
Conduct represents the behaviour of firms in the mar-
ket and it is highly influenced by the market demand. It
is well-known that the market demand determines, in
periods of economic uncertainty, the change of structure
and intensity of competition in the airline sector. This is
one of the many factors that caused the LCC success in
the last decades. Under this aspect, we have to consider
that the segmentation of the air travel demand, into busi-
ness and leisure travellers, influences greatly airline
pricing. Business travellers are less price sensitive, require
more flexibility to change travel arrangements and are
willing to pay much higher prices than leisure travellers.
On the contrary, leisure travellers are usually considered to
be price sensitive and, in their market segment, airlines
can increase revenues by lowering prices [10]. As a con-
sequence, many carriers have adopted a differential pric-
ing: low-fares are targeted at leisure travellers to fill seats
that would otherwise go empty. The pricing structure is
preserved by applying constrains to low-fares making
them unfeasible to business travellers (i.e. pre-booking
periods) [11]. Concentrating their efforts on non-business
travels LCCs have, in the last years, conquered a large
part of the leisure market, especially on short routes.
From 1995 to 2006, LCCs registered a 45% growth of
the weekly seats (Figure 1) and more important is the
constant increase of ASKs [12], that is the number of
seats available for passengers multiplied by the number
of kilometres those seats are flown. LCC share of the
overall European ASKs has grown about 640% since
1997 and LCCs are capturing a steadily growing share of
the European market. It is important to point out that the
growth of the LLC demand continued to go on after
September 11th, whereas full cost air companies faced
severe crisis. Besides, many organization as IATA and
ICAO consider a great part of LCC market to be a newly
Copyright © 2010 SciRes. ME
generated market.
As Conduct we intend also all the management pecu-
liarity that are proper of LCCs. The business model of
LCCs has a direct impact on their cost structure and
consequently on the pricing strategies and revenues. In
Table 2 are described the main aspects that distinguish
low cost and full cost carriers, explaining the respective
strategies of the two in their respect [13]. To achieve the
low operating costs per passenger required, LCCs need
to have as many seats on board of their aircraft as possi-
ble, to fill them as much as possible, and to fly the air-
crafts as often as possible. The cost structure is classified
in: not operating and operating costs. The first ones are
not strictly connected with the LCC activity, while the
second ones depend directly on it. In order to analyze the
cost structure is obviously necessary to focus on the ope-
rating costs that reflect the more efficient management of
LCC operations. Operating costs are divided in direct
and indirect operating costs. Direct operating costs are:
maintenance, passenger service costs, fuel and oil, navig-
ation and airport fees, handling etc. Indirect operating co-
sts are: marketing costs, staff costs, depreciation and int-
erests, etc. Great influence on the direct operating costs
has fuel and oil costs, but these are mostly independent
from the efficiency of the carrier. The main cost differe-
nce between full cost and low cost carriers is represented
by labour cost (about 30%-35%) and depends on three
drivers: a greater productivity of the working-force, a di-
fference in salary between low and full cost carriers, and
a no-service model that allows the reduction of fly atten-
dant and check-in staff.
The second cost difference in order of importance is
on “sales and reservations” (about 13%-18%) and it is ob-
tained by selling directly to customers via Internet and
call centres and by using electronic ticketing. In this way,
LCCs avoid travel agency commissions and computer
reservation system fees. In the USA, Southwest registered
in these cost areas an advantage of 50% over the main
traditional carriers in 2003. It is interesting to notice that in
the revolution of the distribution channels, the traditional
carriers acted as followers instead than as incumbents,
whilst LCCs, the new entrants, behaved as leaders. The
third aspect that distinguishes LCCs is maintenance costs
(a difference of about 12%-17% with full cost carriers):
the competitive advantage, in this case, is caused by the
homogeneity of the LCC fleet (a single aircraft model),
an aggressive negotiation in maintenance contracts
agreements and outsourcing. Other important differences
in the cost structure of low cost and full cost carriers are
ground landing and landing fees, for a total of 20%-25%,
both deriving from the strategic chose of LCCs of secon-
dary airport, where better condition are negotiable. The
remaining 10%-20% of cost divergence is due to other
cost savings such as the no-service policy of LCCs, that is
perhaps the area of cost savings most apparent to passen-
gers [14]. A greater aircraft productivity is undoubtedly
the primary source of LCC competitive advantage: it is
obtained using non-congested secondary airports and not
offering anything other than point-to-point services (i.e.
like interlining). In fact, secondary airports charge air-
lines less than primary airports for using their services.
Moreover, secondary airports are less busy, allowing less
delays due to congestion. As said before, personnel pro-
ductivity is another key area where LCCs gain competi-
tive advantage: LCCs use a single aircraft model and, as
a consequence, pilots and cabin crew can operate on any
aircraft in the fleet. Another interesting factor to examine
is the cost difference between low cost and full cost carriers
Figure 1. LCC ASK share (with respect to all the market).
Table 2. The business model of low cost and full cost carrier.
Low Cost Carriers Full Cost Carriers
Brand One (low-fare) brand Extensions:
Fares Simplified fare
Complex fare
Distribution Online and call
Online, direct, travel
Airports Secondary (mostly) Primary
Connections Point-to-point Interlining, hub and
Class segmentation One class
(high density) Two class
Aircraft utilisation Very high Medium to high
Turnaround time 25 min turnarounds Low turnaround
Product One product: low fare Multiple integrated
Aircraft Single type:
Multiple types:
Seating Small pitch,
no assignment
Generous pitch, offers
seat assignment
Customer service Generally under
performs Full service, reliability
activities Focus on core (flying) Extensions: e.g.,
maintenance, cargo
Source: O’Connell and Williams, 2005
Copyright © 2010 SciRes. ME
with respect to the cost per ASK. In Figure 2 is clearly
depicted as this difference decreases with the length of
the flight (sector length). The reducing cost advantage,
occurring with the increasing sector length, is due mainly
to a decreasing acceptance of lack of service by passen-
gers and an increasing revenue need in LCCs. Focusing
on a sector length of 1,500 Km, the ICAO estimated the
LCC cost advantage as: 30% on total crew costs, 5% on
landing and handling charges, 50% on passenger related
costs, 70% on sales costs and 60% for other costs [14].
To measure Performance is to measure the results of a
firm in terms of productivity and profitability. Since the
LCC model derives competitive advantage from a greater
aircraft productivity and a more efficient cost structure,
the performance of LCCs in 2005 is analysed by means
of profitability and efficiency indexes. We choose three
profitability indexes: ROI (Return on Investment), ROS
(Return on Sales), ROE (Return on Equity). While we
consider the Load Factor of LCCs as the efficiency index.
The analysis evidences the existence of a small number
of large LCCs that gained a high profitability, while a
great number of medium and small carriers faced eco-
nomic and financial difficulties (Table 3). The bad per-
formance of smaller LCCs is motivated by an inefficient
management of their operating costs, that is a dangerous
deficiency while adopting the LCC business model.
Volare Web performed the worst ROS, because the op-
erative costs are one and half greater than the revenues
of this LCC. This result reflects the financial problem
faced by Volare Web that conducted the company to a
controlled administration in order to avoid bankrupt,
followed by its acquisition by the Alitalia Group. Figure
3 depicts the average value of each profitability index
for: 1) large airline companies (more than 3 millions
passenger traffic), and 2) small and medium airline
companies (less than 3 millions passenger traffic).
Volare Web was not considered because of the severe
financial crisis. There is an evident gap between the two
groups in all the profitability indexes, more so for the
ROS index: that confirms the difficulty of smaller and
medium LCCs to manage operating costs in accord to the
LCC business model. The last performance index is a
very important one in the LCC philosophy. The Load
Factor is the percentage of seats filled with passengers: it
indicates that an airplane is more efficiently utilized,
lowering the operating costs and, as a result, the airfares.
A good Load Factor assures the necessary utilization and
productivity of critical LCC resources: personnel and
Figure 4 represents the Load Factors of the sample in
2005: the average value of this index is 75%. An half of
the sample has a Load Factor better than the average
value and from Figure 5 it is evident that there is a corre-
lation between a good financial performance (ROS) and a
high Load Factor: only those carriers that are operatively
efficient have financial success in the long run.
3005007009001100 13001500 17001900
€ / 1000 ASK
Stage length (Km)
Full Cost CarriersLow Cost Carriers
Percentage Difference
Figure 2. Cost per ASK in 2005.
Table 3. Low cost airlines: ROI, ROS, ROE (2005).
Low cost carriers ROI ROE ROS
Blue Air 3.47% 0.00% 1.48%
Bmibaby –1.64% –10.00% –1.05%
EasyJet 3.74% 4.43% 4.37%
Eurofly –4.65% –10.27% –6.59%
Flybe 1.04% 3.14% –5.28%
Germanwings 5.72% 18.51% 2.38%
Hapag Lloyd 9.09% 0.00% 3.61%
Itali Airlines –0.47% 0.59% –0.94%
Lauda Air 3.75% 5.16% 4.57%
Ryanair 10.68% 19.28% 31.28%
SkyEurope –0.52% –7.46% –1.03%
Sterling Airlines –7.27% –3.45% –10.99%
Transavia 3.20% 7.38% 4.10%
Virgin Express –8.98% n.d. –7.73%
Volare Web –4.50% –37.02% –66.81%
Small and Medium
Sample Average
Figure 3. Average ROI, ROS, ROE for large, medium and
small LCCs (2005).
Copyright © 2010 SciRes. ME
50 60 70 80 90100
Blue Air
Easy Jet
Hapag Lloyd
Itali Airlines
Lauda Air
Sterling Airlines
Trans avia
Virgin Express
Volare Web
Load Factor %
Figure 4. LCC Load Factors (2005).
Positions of Ryanair and Volare Web are not a surp-
rise as the first is a best practice of LCCs and the second
had very serous financial problems.
3. Low Cost Carriers, Regional Airports and
Geographic Clusters
Aviation policy makers are facing several issues con-
nected with the growth of LCCs. Among them there is the
necessity to mitigate the environmental effects of this
expansion, especially at secondary airports, since a great
part of LCCs tend to select routes between regional air-
ports. As a consequence, these airports are confronted
with a rapidly increasing traffic, that requires large capi-
tal expenditure for infrastructure investments. The posi-
tive aspect of decentralization from main routes is eco-
nomic regional development. Regional and secondary
airports impact on local economies directly as a catalyst
for other on-site economic activities and indirectly as a
regional economic multiplier. Moreover, congestion at
the major hubs can be lessened by developing secondary
hubs: alternative airports around the main urban envi-
ronment. These are typically remote from the city centre,
with plentiful capacity but little traditional scheduled air
service. Advantages in terms of lack of congestion, and
consequently of pollution, are set against disadvantages
in terms of surface access. In Italian airports this phe-
nomenon is clearly observable from Table 4: data on pa-
ssenger traffic are reported for each Italian airport and it
is clearly visible the rapid traffic growth of smaller and
regional airports with respect to principal ones [15].
The consistent increase in passenger traffic in regional
airports is due mainly to the diffusion and success of
LCCs that, in choosing secondary airports as their bases,
determined the economic and traffic growth of regional
In order to analyse this phenomenon in the Italian
scenario, we considered only those regional and secon-
dary airports that are utilized by the LCCs of the sample
and the number of routes they operate on (Table 5).
Blue Air
Hapag Lloyd
Lauda Air
Sterling Airlines
Virgin Express
Volare Web
-0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -
Load Factor %
Figure 5. LCC Load Factors and ROS (2005).
Copyright © 2010 SciRes. ME
Some LCCs are not present in Table 5 (i.e. EasyJet)
because they operate in primary airports.
The more promising type of regional economic de-
velopment that could directly benefit from increasing
passenger throughput at secondary airports is “cluster
development”. While the idea of the “cluster”, first put
forward by Michael Porter, has attracted some criticism,
it is worth considering whether geographic proximity to
a rapidly-growing airport could enhance the growth and
knowledge spillovers of local industries [4]. Following
this lead, we analyse traffic growth and accessibility (Ta-
ble 6) of secondary airports served by the sample of
LCCs under study.
Table 4. Italian airports: passenger traffic growth.
Airports Passengers
from 2000
to 2006
Alghero 664 330 1 079 843 62.55%
Ancona 433 729 485 929 12.04%
Bari 1 251 682 1 659 323 32.57%
Bergamo 1 241 138 4 356 143 250.98%
Bologna 3 524 789 3 690 953 4.71%
Bolzano 50 124 68 103 35.87%
Brescia 164 804 409 940 148.74%
Brindisi 614 140 794 378 29.35%
Cagliari 2 067 116 2 355 796 13.97%
Catania 3 970 754 5 192 697 30.77%
Crotone 53 275 85 221 59.96%
Cuneo 16 492 18 942 14.86%
Firenze 1 521 272 1 703 303 11.97%
Foggia 30 297 7 709 –74.56%
Forlì 45 933 565 341 1130.79%
Genova 1 063 146 1 013 288 –4.69%
Lamezia Terme 785 060 1 163 121 48.16%
Milano LIN 6 026 342 9 088 607 50.81%
Milano MXP 20 716 815 19 630 514 –5.24%
Napoli 4 136 508 4 588 695 10.93%
Olbia 1 336 618 1 671 218 25.03%
Palermo 3 231 267 3 831 876 18.59%
Parma 75 112 61 429 –18.22%
Perugia 52 802 54 815 3.81%
Pescara 114 024 350 477 207.37%
Pisa 1 246 807 2 334 843 87.27%
Reggio Calabria 538 048 398 089 –26.01%
Rimini 251 139 283 492 12.88%
Roma CIA 829 511 4 234 999 410.54%
Roma FCO 26 288 181 28 683 456 9.11%
Torino 2 814 850 3 148 807 11.86%
Treviso 281 442 1 300 298 362.01%
Trieste 574 665 615 759 7.15%
Venezia 4 135 608 5 825 499 40.86%
Verona 2 293 799 2 649 655 15.51%
Source:Assaeroporti, 2000-2006
Table 5. Secondary Italian airports (2006).
Airport LCCs using the airport as base Number of
Alghero Ryanair, Germanwing 8
Bergamo Ryanair, Transavia, Blue Air,
Skyeurope Eurofly 40
Brescia Eurofly 1
Brindisi Volare Web 1
Ciampino Ryanair, Hapag Lloyd, Sterling
Airlines 27
Forlì Ryanair 5
Lamezia Ryanair, Hapag Lloyd, German-
wing, Volare Web 1
Olbia Hapag Lloyd, Itali 6
Pisa Ryanair, Easyjet, Transavia, Hapag
Lloyd, Eurofly 35
Rimini Hapag Lloyd, Eurofly 4
Treviso Ryanair, Transavia, Skyeurope 13
Verona Germanwing, Blue Air, Eurofly 8
Table 6. Secondary Italian airports: accessibility (2006).
Traffic increase from
2000 to 2006
Airplanes PassengersCargo
AlgheroCagliari 196 12% 63% –65%
Bergamo Milan
LIN-MXP 7 26% 251% 36%
Brescia Milan
LIN-MXP 41 138% 149% 2084%
BrindisiBari 109 1% 29% 134%
Rome CIARome FCO0 106% 411% 37%
Forlì Bologna40 262% 1131% –81%
Lamezia Reggio
Calabria 98 57% 48% –17%
Olbia Cagliari 225 33% 25% –58%
Pisa Florence49 36% 87% 20%
Rimini Bologna61 29% 13% –47%
Treviso Venice 20 92% 362% 97%
Verona Venice 63 6% 16% 20%
Observing Figure 6 it seems clear that LCCs success
has a great deal to do with regional and secondary air-
ports development. These airports gradually specialised
in passengers transportation, leaving behind cargo trans-
port (with the exception of Brescia, Brindisi and Treviso),
according with the new alliances with LCCs.
Copyright © 2010 SciRes. ME
-400%0%400%800% 1200%
Lamez ia
% traffic growth 2000-2006
airplanes %passengers %cargo %
Figure 6. Secondary Italian airports: passenger and cargo
traffic growth (2000-2006).
In order to realise different patterns in the develop-
ment of secondary airports, is better, then, to focus only
on passenger and airplane traffic (as airplane traffic we
intend the number of airplanes that landed and departed
from the airport). The airports of Treviso (secondary air-
port of Venice), Ciampino (secondary airport of Rome),
Bergamo (secondary airports of Milan) and Forlì (secon-
dary airport of Bologna) are the fastest growing in terms
of passenger traffic, as result of being a secondary airport
of big hubs such as Rome, Milan and secondarily Venice
and Bologna.
In order to analyse the importance of geographical ac-
cessibility for cluster development (indicated by the traf-
fic increase), we calculate “accessibility” for each sec-
ondary airport as the travel time in minutes between the
primary and secondary airport (Table 6), as follows:
 
max 0;,,TtCStCP (2)
where t(C, P) is the travel time (by car) to the primary
airport of a city from the centre of the city and t(C, S) is
the travel time to the secondary airport from the same
starting point. Travel time was calculated by means of
the well known Michelin’s website.
For example, for the airport of Treviso, the accessibil-
ity results 20 minutes, where applying (2):
t(C, P) = t (Venice Centre, Venice airport) = 54 min,
t(C, S) = t (Venice Centre, Treviso airport) = 1 h 14 min.
For Bergamo airport (as for Brescia) we considered
the average value of T estimated over the two principal
airports of Milan, Linate and Malpensa.
The analysis of traffic and accessibility data shows
four cluster of secondary and regional airports (Figure7).
The first cluster is formed by Bergamo, Ciampino and
Treviso and has a high score in terms of passenger traffic
growth and accessibility. This group of airports follows
the same pattern of development, clearly due to the in-
creasing traffic of LCCs and to the proximity of big cit-
ies and big hubs. The high degree of accessibility has
allowed a huge transfer of passenger traffic from the
main hub to the secondary airport, favouring surely
“cluster development”. In fact, Ciampino is nearer to
Rome than Fiumicino (the primary airport of Rome) and
both Bergamo and Treviso are easily accessible.
Fo rlì
Lamezia Pisa
Accessibility (min)
Passenger traffic growth (2000-2006) log scale
Figure 7. Accessibility and traffic growth.
Copyright © 2010 SciRes. ME
Considering a lesser accessibility (20-50 min) and
traffic growth, we can make up a second cluster that in-
cludes Pisa, Brescia and Forlì: for this group the regional
economic development could directly benefit from in-
creasing passenger throughput at secondary airports in
terms of “cluster development”. In fact, even if the growth
of the airport of Pisa and Brescia, regional airports in
competition with the airports of Florence and Milan is
less remarkable than the airports of the first group, it is
noteworthy, in particular for Brescia if we consider cargo
traffic. The huge growth of Forlì is explained by its past
excessive underutilization (Table 4 and Table 6).
Another pattern of development characterizes Brindisi,
Lamezia, Rimini, Verona (third cluster) and Olbia, Al-
ghero (fourth cluster) that show a low growth both of
airplane and passenger traffic: in this case development is
due to domestic or leisure traffic and the absence of a
near main hub has prevented effects of substitution in
passenger traffic. Actually, for this group the regional
economic development could directly affect occupation
and be a catalyst for other on-site economic activities,
but the absence of a near industrial environment will
certainly not favour a “cluster development”.
4. Conclusions
Liberalization in Europe has opened up remarkable op-
portunities for the LCCs. Actually, passengers have
benefited from the growth of the LCCs in terms of more
competition, more destinations and a greater diversity of
fares. If they maintain the 20% yearly growth that has
been seen in the last decade, they will occupy around one
third of the European market in a few years time.
Despite the success of the LCCs, however, there is not
adequate evidence to conclude that they severely canni-
balize the market of the full service carriers, as the great
part of the LCC passengers, especially on the shorter
routes, are newly generated traffic. Besides, on some
major and congested European routes traffic is diverted
from the network carriers to LCCs. However, it appears
unlikely that the LCCs will enter long-haul markets to
any significant extent, as the characteristics of these
markets are strongly against the LCC business model.
Simplicity and efficiency have been the keys to the suc-
cess of the LCCs, but for how much more time is the
LCC model going to be sustainable? Their continuous
expansion expose them to direct competition at the sec-
ondary airports, while the traditional full cost carriers are
responding more effectively to the LCC business model
with lower fares. In fact, the full cost carriers are com-
peting with LCCs on certain point-to-point routes, but
they are responding by reducing aircraft size rather than
by withdrawing from these routes.
Aviation policy makers are facing several issues con-
nected with the growth of LCCs. Among them there is
the necessity to mitigate the environmental effects of this
expansion, especially at secondary airports, since a great
part of LCCs tend to select routes between regional air-
ports and, as a consequence, these airports are confronted
with a rapidly increasing traffic, that requires large capi-
tal expenditure for infrastructure.
In this scenario, it is of the utmost importance to en-
sure high standards of safety, organizing the secure allo-
cation of the increasingly scarce capacity of congested
European airports.
The positive aspect of decentralization from main
routes is the economic regional development. In fact,
regional and secondary airports impact on local econo-
mies directly as a catalyst for other on-site economic
activities and indirectly as a regional economic multiplier.
Moreover, congestion at the major hubs can be lessened
by developing secondary hubs: alternative airports
around the main urban environment. These are typically
remote from the city centre, with plentiful capacity but
little traditional scheduled air service. Advantages in
terms of lack of congestion and consequently of pollu-
tion are set against disadvantages in terms of surface
access. While we can conclude that the growth of secon-
dary airports will benefit the surrounding regions, we
would need to make a more thorough analysis before
being able to even try to quantify the effect of the airport
growth on these regions. An interesting line of inquiry
would be whether the economic development effects of
LCC services differ in different economic settings. It
would be interesting to compare the growth of secondary
airports and the consequences for regional economic
development between Italian regions, in order to under-
stand how introducing LCC services to previously un-
derserved airports affects the surrounding regions.
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