How Strong Is Airport Competition: Is There a Case for Regulation?

Peter Forsyth, Jürgen Müller, Hans-Martin Niemeier () and Eric Pels ()
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Peter Forsyth: Monash University
Jürgen Müller: Berlin School of Economics and Law (HWR)
Hans-Martin Niemeier: Institute for Transport and Development, School of International Business, University of Applied Sciences
Eric Pels: School of Business and Economics, VU University

Chapter Chapter 2 in Economic Regulation of Urban and Regional Airports, 2023, pp 13-46 from Springer

Abstract: Abstract Given the natural monopoly properties and higher levels of connectivity of large airports, workable airport competition may not be possible, requiring regulation. This simple rule becomes more complicated, when looking also at the product range of airports, difference in consumer preferences and their price elasticity or competition from other transportation modes like high-speed rail on short-haul routes, thereby also affecting the catchment area. Control of access to aviation-related services, like ground handling, can also matter. Private versus public ownership of airports complicates the picture, as do airport capacity constraint. Transaction costs and opportunistic behaviour can also lead to regulation. After covering the literature concerning airport regulation, the chapter goes on to look at a number of actual cases involving market power and its regulation. It also looks at airports charging behaviour and price discrimination, depending on the level of congestion at an airport. A number of studies of airport competition and its implications for regulation are summarized, especially for the UK, the Netherlands [Schiphol] and Australia. The studies commissioned by the ACI, which suggest that airports should be just subject to competition law and regulation should be the exception are also discussed.

Keywords: Natural monopoly; Scale effects; Market power; Catchment area; Countervailing power; Demand side and supply side substitution; Price discrimination (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/978-3-031-20341-1_2

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