Discounts and Public Service Obligations in the Airline Market: Lessons from Spain

Air services on thin routes: Regional versus low-cost airlines

“…Our results suggest that some low-cost carriers prefer to provide services on denser routes (as is the case of Southwest, for example). 15 By contrast, European low-cost airlines dominate routes with a lower number of seats. The coe¢ cient associated with the seats variable is negative and statistically signi…cant and the predicted decrease in probabilities is about 36%.…”

Contestability and public concern about airfares: A case study in the Canary Islands

“…Following existing legal provisions on public service obligations, Spain provides several subsidies for some routes (mostly in the form of 10 There are other applications of this methodology in Kim and Singal (1993) for the North American air travel market 11 Estimates of this test are available from authors upon request. 12 As used in Calzada and Fageda (2012), Fageda et al (2012) or Fageda and Perdiguero (2014). This is due to the inexistence of statistical datasets on airline prices in Spain.…”

Does an increase in subsidies lead to changes in air fares? Empirical evidence from Spain

“…In Spain, Calzada and Fageda (2012) show that routes benefiting from price discounts are priced more highly than the remainder of the domestic routes. Fageda et al (2012) draws on data of routes departing from Gran Canaria airport, including national and international destinations.…”