Which type of agreement puts airlines at the greatest financial risk?

The residual agreement places airlines at the greatest financial risk because it ties the financial responsibilities and revenue distribution directly to the airport's performance. In this type of agreement, airlines typically agree to cover the airport's operating costs, including maintenance and capital improvements, after specific revenues are collected. If the airport does not generate enough revenue, the airlines must make up the difference, which can lead to significant financial liabilities.

In contrast, other agreement types, such as fixed or block agreements, generally establish more predictable and stable financial obligations for airlines. Fixed agreements require airlines to pay a set fee regardless of the airport's performance, minimizing their financial exposure. Block agreements involve pre-purchased capacity that airlines can use, which also provides a level of predictability in costs. Exclusive agreements could limit competition but do not inherently carry the same level of financial risk tied to performance as residual agreements do. Thus, the structure of residual agreements makes airlines more vulnerable to fluctuations in airport revenue and operational outcomes.