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Hub Premium, Airport Dominance and Market Power in the European Airline Industry

  • Enrico Bachis

    ()

    (University of Nottingham)

  • Claudio A. Piga

    ()

    (Loughborough University)

This study addresses two issues relating to the pricing behaviour of European airlines: 1) whether an airline's dominant position at the origin airport, at the route and the city-pair level affects the airlines' market power; 2) whether fares follow a monotonic time path consistent with the pursuing of an inter-temporal price discrimination strategy. Our estimates reveal that enjoying a dominant position within a route is conducive to higher fares. On the contrary, dominance within a city-pair does not seem to facilitate the exercise of market power. We find robust support to the assumption that fares follow a monotonic time path.

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File URL: http://www.rivistapoliticaeconomica.it/2006/set-ott/Bachis-Piga.pdf
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Article provided by SIPI Spa in its journal Rivista di Politica Economica.

Volume (Year): 96 (2006)
Issue (Month): 5 (September-October)
Pages: 11-54

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Handle: RePEc:rpo:ripoec:v:96:y:2006:i:5:p:11-54
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