ABSTRACT
This chapter proposes a flexible design strategy to deal with the uncertainty of the dynamic. Its key element involves the use of real options that permit airport owners to adjust their facilities easily to changes in the location and needs of air transport. The chapter illustrates this approach through a discussion of the prospective aviation future for Portugal. It presents and defends the hypothesis that the ascendancy of low-cost airlines entails increased expansion of the network of low-cost airports, and of low-cost airport facilities in general. The chapter argues that producers with the lowest costs ultimately define the market. The definition of 'low-cost airlines' centers on the airlines' actual costs of production, for example, per seat-mile. The market capitalization is a better measure of the strength of an airline than more traditional measures, such as fleet size.
