By Darin Lee
This can be the 1st in a brand new sequence of books at the economics of the airline undefined. The sequence is a suite of unique, state-of-the-art study papers from a global panel of unique members. quantity 1 will specialise in subject matters regarding pageant coverage and antitrust, comparable to the commercial effect of airline alliances (both foreign and domestic), predation, and incumbent responses to in your price range access. a part of a "New Series", this quantity specializes in festival coverage and antitrust. Its members are overseas specialists within the box.
Read or Download Advances in Airline Economics, Volume 1: Competition Policy and Antritrust (Advances in Airline Economics) PDF
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Extra info for Advances in Airline Economics, Volume 1: Competition Policy and Antritrust (Advances in Airline Economics)
Rather, as a minimum, economists have done revenue and cost comparisons at the flight level. Still, the question remains as to the appropriate measures of revenue and costs to be used for the test. Should a given flight’s revenues, for example, include some portion of the revenues of passengers connecting from or to other flights? Should the measure of flight costs include only variable costs, or should it also include fixed costs such as aircraft costs? Clearly, whether a carrier is found to be engaging in predatory conduct will turn on the answers to such questions.
The application to the Competition Tribunal was also motivated by Air Canada’s response to the entry of a new carrier, CanJet, on a number of routes out of Halifax. The application states that Air Canada responded to the entry of CanJet by adding and maintaining additional capacity on three Halifax routes, introducing new lower fares on the routes, and consequently operating capacity on the routes at fares that did not cover the avoidable costs of providing the service. The abuse of dominance case brought against Air Canada was the first to cite anticompetitive acts (specifically, those in (a) above) contained in the Airline Regulations.
Second, while specific cost figures and the exact breakdown of costs are not provided, the “average cost per paying customer” standard appears to differ substantially from the “avoidable costs of a flight or route” standard that has been adopted in other jurisdictions. It does not appear that the Federal Cartel Office considered whether the entire route, or specific flights, were covering the costs of offering those flights, considering all revenues attributable to the flight. Therefore, it remains in considerable doubt whether Lufthansa would have failed an avoidable cost test of the sort being applied in other jurisdictions.