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Egypt Airline Passengers Market: Competition and Performance


  • Noha S. Omar
  • Khalid Sekkat

    () (University of Brussels)


In the present era of dramatic changes in the air transport services sector, this paper examines the link between the extent of liberalization and the performance of the Egyptian airline market. The study is conducted at the route level, and due data unavailability it is limited to the biggest Egyptian carrier, namely EgyptAir. Estimation results show that air liberalization reduces EgyptAir’s fares but have two conflicting effects on its number of passengers. A direct negative impact on EgyptAir’s number of passengers due to their switch to other carriers and an indirect positive effect due the reduction in fares. Simulations show that the net effect on the number of EgyptAir’s passengers is negative. However, the decrease in the number of EgyptAir’s passengers does not mean a decrease in the number of passengers to and from Egypt. Even with a constant income, the number of passengers to and from Egypt might increase if competition results in lower fares for all carriers. Some of the existing passengers just switch from EgyptAir to another carrier. Provided the other carrier is Egyptian (existent or newly created), the total revenues of travel to and from Egypt should not change for the Egyptian economy. In addition, simulation concludes that the consumer’s surplus increases while that of producer declines; hence, leading to a net positive effect on society welfare. Therefore, if the aviation authority wants neither to waste the society welfare nor to create disincentive for the Egyptian producers to liberalization measures, it should adopt the liberalization measures with twin strategies - fostering effective entry of domestic carriers and fostering competition among these carriers.

Suggested Citation

  • Noha S. Omar & Khalid Sekkat, 2012. "Egypt Airline Passengers Market: Competition and Performance," Working Papers 669, Economic Research Forum, revised 2012.
  • Handle: RePEc:erg:wpaper:669

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    References listed on IDEAS

    1. Micco, Alejandro & Serebrisky, Tomas, 2006. "Competition regimes and air transport costs: The effects of open skies agreements," Journal of International Economics, Elsevier, vol. 70(1), pages 25-51, September.
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    3. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
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    5. Touhami Abdelkhalek & Ejjanoui, 2010. "Approche Multidimensionnelle de la Pauvreté: Présentation Théorique et Application au cas de la Ville de Marrakech," Working Papers 513, Economic Research Forum, revised 04 Jan 2010.
    6. Nora Dihel & Ben Shepherd, 2007. "Modal Estimates of Services Barriers," OECD Trade Policy Papers 51, OECD Publishing.
    7. Lin, Ming Hsin, 2008. "Airline alliances and entry deterrence," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(4), pages 637-652, July.
    8. Albers, Sascha & Koch, Benjamin & Ruff, Christine, 2005. "Strategic alliances between airlines and airports—theoretical assessment and practical evidence," Journal of Air Transport Management, Elsevier, vol. 11(2), pages 49-58.
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