Liberalization of the European Ramp Handling Market - A Transaction Cost Assessment

Ten years have passed since the European Commission obliged its member states to open their national handling markets to competition. This paper analyzes whether the policy has allowed airlines to design efficient contractual and organizational solutions with their ramp handling suppliers. Applying transaction cost economics as the lens of analysis, we propose that awarding temporally limited operating licenses to new entrants results in inferior economic performance. The presented econometric results on the duration of 42 ramp handling contracts are largely supportive of this proposition