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Low cost air travel and regional co-operation. Low cost air travel – Market growth. Share of European air travel market. 38 % of the inter-European/British market 500 destinations in Europe (+ 300% 2002-2004) 100% increase in Sweden 2002-2003. (est.). Low cost air travel – Profitability.

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Low cost air travel – Market growth

Share of European air travel market

  • 38 % of the inter-European/British market

  • 500 destinations in Europe(+ 300% 2002-2004)

  • 100% increase in Sweden 2002-2003

(est.)



Business concept – LCC demands

  • Low charges level at airports

  • Simple charge structure

  • Establishment grant of some sort

    Background - motives

  • 10-25% expenditure

  • Risk with new establishments. Who takes those risks? Opportunities for both parties. Establishment grant - shared responsibility

  • Demands vary between companies


Catchment area

  • Airport role in the region

  • Passenger accessibility

  • Assessed passenger numbers

  • Proximity to large city

    Leads to high cabin factor


Passenger volumes

  • LCC account for 15% of passenger volumes at Malmö-Sturup Aiport

  • Attractive to Danish travellers/expanding airport catchment area

  • Increase in commercial airport revenues


Socio economic analyses

ACI Europe – Economic Impact Study Kit

  • Direct effects

  • Indirect effects

  • Cause effects

  • Dynamic effects

    Effects on employment and tax revenues

Källa: ACI Europe/York Consulting (2000). Creating employment and prosperity in Europe: An economic impact study kit. www.aci-europe.org


Direct effects

  • Generated by the operations at the airport

  • Rule of thumb: 1,000 employees per million PAX

    MMX

  • 2003: 1.75 million PAX, 1,400 employees

     Ratio: 0.8 employees per 1,000 PAX


Indirect/cause effects

  • Generated by the operations who ”serve” the airport

  • Generated by those directly or indirectly employed

  • Multiplication effect – varies between 1.3 and 4.0 uncalibrated average 2.1

  • MMX: multiplication effect between 1.3 and 2.1

    Indirect and cause effects:400 – 1,500 employed


Dynamic effects

Generated by attractive, retaining and expansivie operations

MMX

  • Proximity to Kastrup reduces effect

  • Inregias assessment from August 2004

  • 20 % of the direct/indirect employment

    Dynamic effects:

    400 – 600 employed


Total effect

Result of direct, indirect, cause and dynamic effects

2,200 – 3,500 employed

0.8 % - 1.3 % of those employed in the region

Tax revenues between 175 and 280 M SEK


Importance of international tourism

Economic effect of tourists flying to MMX

Calculations based on information from:

  • Ryanair, London-Stansted to MMX

  • British overnight accommodation in Malmö and Skåne

  • SCB’s consumer survey 2001-2003

  • SCB’s salary statistics

  • Own calculations


British overnight accommodation

Overnight hotel accommodation in Malmö (1000’s)

35

30,5

30,3

30,4

30

25

24,4

24,4

23,6

20

18,4

From GB

15

13,2

12,4

10,9

10

8,6

5

0

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003


Tourism – Economic effects

  • Spend between 1,000 and 1,500 SEK per person and day

  • Average length of stay 4 days

    Regional total turnover 48 to 72 M SEK

    45 to 70 job vacancies


1 Ryanair route

5 Ryanair routes

10 Ryanair routes

Capacity/year

200 000

1 000 000

2 000 000

Cabin factor

0,85

0,85

0,85

Increased number of passengers

170 000

850 000

1 700 000

Total number of job vacancies

212

1061

2122

Increased tourist turnover

48 000 000 SEK

24 000 000 SEK

480 000 SEK

Tourism employment

45

227

454

Tax revenue

16 930 000 SEK

84 651 000 SEK

169 303 000 SEK

Economic effect of new airline routes


Cause - Effect - Co-operation

Visibility

Accessibility

Desirability

Visibility: potential visitors are familiar with the region

Desirability: wide regional choice

Accessibility: simple and easy travelling within the region


Potential forms of co-operation

  • Regional financing or subsidies

  • Nyköpings Municipality

  • Girona/Catalunya

  • Co-operation and joint projects

  • Strengthen existing co-operation

  • Suggested co-operation and projects


Regional financing

Neither interest nor understanding from interested parties

  • Lack of knowledge

  • Political and legal restrictions

  • Limited economic resources

    Increase knowledge through communication and co-operation. Use direct information such as employment estimates!


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