ABSTRACT
Airlines continue to cross-subsidise their loss-making operations with the profits they earn on other parts of their networks. The ability of an EU state to impose a Public Service Obligation (PSO) on any route, requiring subvention arises from Article 4 of the 1992 Council Regulation on access for community air services to intra-community routes. The original intention for the PSO system was to ensure the maintenance of essential air services to remote and peripheral regions. A number of factors influence the amount of subvention that will be required to operate a given PSO service. The costs of operating a route will be strongly affected by the size and type of aircraft. The route length, available airport infrastructure, the volume and seasonal nature of the traffic, and the type of route will determine the choice of aircraft to be employed. At Europe's busiest airports, as a result of "grandfather rights", it is airlines that allocate takeoff and landing slots.
