Publication: Market Power : Airports - Vertical Integration between Airports and Airlines
Date
2003-03
ISSN
Published
2003-03
Author(s)
Serebrisky, Tomás
Abstract
In the late 1980s and the 1990s many
countries privatized airports or concessioned their
operation. The United Kingdom began the trend, followed by
other countries adopting new forms of infrastructure
ownership and management. To control infrastructure
licensing and the "natural monopoly"
characteristics of some airport services, governments
developed regulatory policies for airport systems. The
operation of an airport creates incentives to transfer the
airport's market power to the air transport market. If
the airport market is regulated but the airport operator is
allowed to control at least one airline, those incentives
can give rise to anticompetitive practices aimed at
displacing competing airlines. When the regulatory framework
for airports lacks explicit rules about such vertical
integration, that can have consequences for competition in
the air transport market. Australia and Chile, for example,
have an explicit prohibition on vertical integration. By
contrast, Argentina has no restrictions on vertical
integration leaving it to the antitrust agency to decide
whether to approve or reject a vertical merger. Airlines
provide air transport services by combining aircraft,
personnel, airport services, and other inputs. Airports
supply a series of services to air transport companies and
to passengers. Aeronautical services (rescue, security,
firefighting, infrastructure supply, runway and taxiway
maintenance). Aeronautical-related commercial services
(catering; supply of fuel and lubricants; baggage,
passenger, and aircraft assistance). Commercial services
(banks, hotels, restaurants, car rental, car parking, retail
shops, duty-free shops).
Citation
“Serebrisky, Tomás. 2003. Market Power : Airports - Vertical Integration between Airports and Airlines. Viewpoint. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/54ca976a-06cd-5034-9efb-871d61a28655 License: CC BY 3.0 IGO.”
Report Series
Report Series
Other publications in this report series
-
PublicationInvestment Climate in Africa(World Bank, Washington, DC, 2015-07-01)The World Bank Group has been working on investment climate reform in Sub-Saharan Africa for nearly a decade, a period characterized by dramatic economic growth on the continent. Establishing links between such reform interventions and economic growth, however, is a complex problem. Although this note finds some connection between investment climate reform and economic growth, establishing more concrete evidence of causation will require greater focus at the country level, as well as on small and medium enterprises. This is where investment climate interventions generate change.
-
PublicationExport Competitiveness: Why Domestic Market Competition Matters(World Bank, Washington, DC, 2015-06)This review of the empirical literature shows that industries with more intense domestic competition will export more. Competition law enforcement can be traced to export performance and is complementary to trade reforms. Pro-competition market regulation that reduces restrictions and promotes competition, where it is viable, is an important determinant for trade. The elimination of barriers to entry and rivalry, and a level playing field in upstream sectors contributes to export competitiveness in downstream manufacturing sectors. In some sectors, effective competition policy can directly lower trade costs.
-
PublicationPrimary Care for the Poor: The Potential of Micro-Health Markets to Improve Care( 2015-01)Much of the primary curative care provided to the poor by the private sector occurs not at large hospitals but at small, single-person clinics. While such micro-health providers increase access, questions persist about quality. Some have argued that the micro-health sector needs to be better regulated. This note cites recent studies in arguing that the micro-health sector needs to be better understood. A more evidence based approach may enable the World Bank Group to better target investments and interventions and help these providers fulfill an important role serving the poor. The following recommendations are made at the conclusion of this paper: (1) Effort, rather than hardware or training, may count the most. (2) Scaling up interventions to improve quality requires understanding and addressing market failures. (3) Changing the way impacts are measured will lead to smarter investments.
-
PublicationSmall Business Tax Regimes(World Bank, Washington, DC, 2016-02)Simplified tax regimes for micro and small enterprises in developing countries are intended to facilitate voluntary tax compliance. However, survey evidence suggests that small business taxation based on simplified bookkeeping or turnover is sometimes perceived as too complex for microenterprises in countries with high illiteracy levels. Very simple fixed tax regimes not requiring any books or records tend to be overly popular but prone to abuse. System reforms will require more precise tailoring of the simplified regimes to their target beneficiaries, coupled with strong compliance management to detect and deter abuse. The overall objective of simplified taxation for micro and small enterprises (MSEs) in developing countries is generally to facilitate voluntary tax compliance and remove obstacles in moving toward business formalization and growth.
-
PublicationCompetition and Poverty(World Bank, Washington, DC, 2016-04)A literature review shows competition policy reforms can deliver benefits for the poorest households and improve income distribution. A lack of competition in food markets hurts the poorest households the most. Competition in input markets and between buyers helps farmers and small businesses. And more competitive markets bolster job growth over the longer term. More research is needed, however, to better understand the impact of competition reforms and antitrust enforcement on poverty and shared prosperity.