Analysing air operators’ managerial perceptions of incentives for competing for regional PSO air services within Europe

Abstract

While it has been established in previous research that public support for air services to peripheral or economically underdeveloped regions is justifiable, the current EU Public Service Obligation (PSO) air service mechanism and particularly the level of competition for PSO contracts can be improved. This paper set out to identify best practice from different European policy approaches by viewing issues from an air operator perspective. The heart of this paper is a survey of European regional air service providers. We examine the airline managers’ perspectives in relation to assessing and bidding for PSOs on scheduled air services. Proposed improvement areas include issues around the simple dissemination of PSO opportunities in the single market, adequate response times for proposal preparation/submission and in preparing for a start date, incentives to develop the air service during the contract period in terms of revenue and patronage. We also identify entry barriers as well as issues around risk sharing, transparency and effectiveness of PSO contract awarding procedures and trust issues with procurement authorities.