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

Peter Forsyth, Jürgen Müller, Hans Martin Niemeier, Eric Pels*

*Corresponding author for this work

Research output: Chapter in Book / Report / Conference proceedingChapterAcademicpeer-review

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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.

Original languageEnglish
Title of host publicationEconomic Regulation of Urban and Regional Airports
Subtitle of host publicationIncentives, Efficiency and Benchmarking
EditorsP. Forsyth, J. Muller, H.M. Niemeier, E. Pels
PublisherSpringer Science and Business Media Deutschland GmbH
Chapter2
Pages13-46
Number of pages34
ISBN (Electronic)9783031203411
ISBN (Print)9783031203398
DOIs
Publication statusPublished - 2023

Publication series

NameAdvances in Spatial Science
PublisherSpringer
ISSN (Print)1430-9602
ISSN (Electronic)2197-9375

Bibliographical note

Publisher Copyright:
© 2023, Springer Nature Switzerland AG.

Keywords

  • Catchment area
  • Countervailing power
  • Demand side and supply side substitution
  • Market power
  • Natural monopoly
  • Price discrimination
  • Scale effects

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