On the Contestability of Airline Markets: Some Further Evidence

Abstract

A key element in determining the degree of inherent contestability of markets is the presence and extent of entry barriers. In US aviation markets, the entry barriers historically imposed by the Civil Aeronautics Board have been largely removed. However, it is thought that other entry barriers — barriers caused by historically determined feed advantages and airport access restrictions — may still prevent airline markets from being contestable. This chapter examines some recent evidence on the extent to which such barriers are currently significant in US aviation markets. The work represents a second effort at examining the degree of contestability of aviation markets during the transition to deregulation.¹