CARDIFF AIRPORT

Cardiff Airport: Air Passenger Duties

Cardiff Airport: Air Passenger Duties

LITERATURE REVIEW

In Europe, the rapid growth of low-cost airlines (LCAs) has been made possible by the civil aviation industry being fully liberalized in 1997, allowing any airline registered in any European Union (EU) member state to serve any city-pair inside the EU(Harvey, 2007: pp. 45). In the process, the industry has been radically shaken up as LCAs expanded their operations, opening up new routes with new destinations and greatly extending demand with their low prices, forcing the traditional full service airlines (FSAs) to respond by adapting their own operations and prices to compete more effectively (Carlin, 1996, pp. 54-56). As a consequence, passengers appear to have been the real winners from this revolution, enjoying a wider choice of routes, more frequent flights, and lower prices.

Nevertheless, as the sector matures and consolidates, there is a concern that price competition might diminish. In particular, it is recognized that mergers between airlines may allow efficiencies to be realized, but will this be at the expense of higher prices and less choice for consumers? The 2007 decision by the European Commission to block the proposed merger of Ryanair and Aer Lingus highlights how seriously this concern is taken(Hanawalt, 2003: Pp. 20-25). The central question examined by this paper is whether previous mergers involving LCAs have had such an effect. Specifically, this paper assesses the impact on prices of the first two important mergers involving European LCAs: EasyJet's acquisition of Go Fly in 2002 and Ryanair's acquisition of Buzz in 2003(Harvey, 2007: pp. 45).

Although other mergers among LCAs have occurred in the past (e.g., Southwest's acquisition of both Morris Air and Muse Air), previous studies of airline takeovers have largely focused on FSAs in the United.

The terms of reference of the Commission state under part 1: financial accountability that the aim is to review the case for devolution of powers and recommend a package of powers that would improve the financial accountability and which are likely to have a wide degree of support. This includes resolving the legal and practical implementation issues including consistency within the United Kingdom.

Air passenger duty is cited in the Silk Commission standard note as being circa £0.1 bn generated by Welsh originating passengers in 2009/10. Cardiff Airport's own calculations estimate APD generated from passengers using Cardiff Airport in 2011 was £8 million of which circa £1 million was generated on long haul travel via Amsterdam(Hanawalt, 2003: Pp. 20-25). The management of Cardiff Airport argues that APD is an appropriate tax to be devolved and offers the Welsh Government a tool which can be directly applied to support objectives of improved connectivity.

Cardiff Airport

Cardiff Airport (CA) is owned by Airport Concessions and Development Limited (90% Abertis Infraestructuras, 10% Aena Internacional), who also own Belfast International airport and have operational, management and development responsibility of Luton airport (Hanawalt, 2003: Pp. 20-25). CA has a core population catchment of 2,279,000 from mid and south Wales: ...