ABSTRACT
This chapter examines the predation in air service markets within the context of a country's domestic trunk routes drawing on certain experience, including from Australia. An economic framework is constructed to improve the general understanding of predation. The chapter provides a brief review of salient features of air services, including market definition, and a perspective on the relationships between market barriers, market power, and predation. It analyses specific barriers to resolve whether they are independent sources of impediments to entry or whether they are a 'derivative' based upon other more fundamental barriers or factors and, if so, how that may matter. The chapter also provides a brief discussion of market power, outlines the challenges of formulating an economic test for predation, and argues how the 'most favoured' economic loss test using an avoidable cost datum should be strengthened.
