OECD/ITF Joint Transport Research Centre Discussion Papers
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- International Transport Forum Discussion Papers
The International Transport Forum at the OECD is an intergovernmental organisation with 52 member countries. It acts as a strategic think tank for transport policy and organizes an annual summit of ministers. Our work is underpinned by economic research, statistics collection and policy analysis, often undertaken in collaboration with many of the world's leading research figures in academia, business and government. This series of Discussion Papers is intended to disseminate the International Transport Forum’s research findings rapidly among specialists in the field concerned.
- ISSN: 20708270 (online)
- https://doi.org/10.1787/20708270
Impacts of Airports on Airline Competition
Focus on Airport Performance and Airport-Airline Vertical Relations
This paper examines revenue structure, regulation, and market power of airports, and
how they affect airport’s services to airlines and influence the form of vertical relationship
between airport and airlines, and thus, eventually on competition in airline markets. In
addition, we also examine the competitive consequences of common ownership,
coordination or alliance among multiple airports in a region.
The key findings are: Concession revenues are of increasing importance to airports. The positive
externality of air traffic on the demand for non-aeronautical services, along with
competition among both airlines and airports, induces a vertical cooperation
between airports and the dominant carrier at the airport. Airports have substantial market power due to the low price elasticity of their
aeronautical services. However, such airports’ market power is moderated by
competition in both the airline and airport markets. There are benefits for both airports and airlines from entering into long term
relationships.
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