Feasibility and desirability of airport competition: The role of product substitutability and airlines' nationality

Abstract

Competition between airports within a nation is not always feasible. Some airports are sheltered from other airports competition because catchment areas do not overlap due to geographical reasons or consumers' preferences. This is not necessarily serious if competition with non-national airports exists, or the existence of other goods strongly interrelated with the airport market limits the possibility of market power. However, even when competition between airports is feasible, there is no consensus among academics and practitioners about its desirability. In this paper we argue that, even when airport competition is feasible, it might not be desirable from the national point of view. Our argument is based on the joint analysis of airports' market power, airlines' market power, and airlines' nationality.