IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Barriers to contestability in the deregulated European aviation market

Listed author(s):
  • Barrett, Sean D.
Registered author(s):

    The deregulation of aviation in the United States and intercity bus transport in the United Kingdom initially resulted in substantial fare reductions associated with new market entry. Many new market entrants subsequently left the market and fares increased. International aviation in Europe has been operated by national airlines with price collusion and capacity sharing and a ban on new entrants. The normal economy fares charged on air services within Europe are the highest in the world. Therefore, there is significant scope for fare reductions when the European Community (EC) internal market comes into operation in 1993. Deregulation of market access will, however, leave unaddressed other barriers to contestability in the deregulated European aviation market. The structural barriers to contestability include hub airport dominance by the incumbent airlines, ground handling monopolies, and computer reservation system (CRS) bias. The paper proposes measures to ensure access to major airports for new entrant airlines on equal terms with incumbent airlines and the deregulation of the market for airport ground handling. The EC code of conduct for the neutral operation of CRS for incumbent and new entrant carriers is an important precedent. The strategic obstacles to contestability in a deregulated European airline industry are anticompetitive mergers and predatory pricing. In recent years national airlines have acquired several independent airlines in important European markets. It is recommended that such takeovers be prohibited because of their anticompetitive implications in the absence of competition between national airlines. The large networks of national airlines allow them to pursue policies of geographical price discrimination with reduced fares on contested routes and higher fares on uncontested routes. Price surveillance is recommended to explain fare differences between contested and uncontested routes. It is recommended that the EC competition policy exemption for price consultations between airlines be ended. Without measures to tackle the structural and strategic obstacles to competition in European aviation, its liberalization may have no impact on the present high-cost system.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

    Volume (Year): 26 (1992)
    Issue (Month): 2 (March)
    Pages: 159-165

    in new window

    Handle: RePEc:eee:transa:v:26:y:1992:i:2:p:159-165
    Contact details of provider: Web page:

    Order Information: Postal:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:26:y:1992:i:2:p:159-165. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.