ABSTRACT
EU air transport liberalisation has realised some noticeable achievements, particularly the emergence and growth of LFAs. However, Morrell (1998) points out that some of the expectations of liberalisation have not been met. In particular, flag carrier monopolies and duopolies persist across the EU. Most of Europe’s air routes still have only one or two competitors. Not only that but as Uittenbogaart illustrates, at the height of the liberalisation process (1992-1996), the number of duopoly routes decreased from 40 per cent to 30 per cent, with a parallel rise in monopoly routes from 56 per cent to 64 per cent (1997, p. 217). However, the fact remains that leading LFAs such as Ryanair and easyJet are steadily eroding the figure and market deregulation has allowed them to do so. In 1992, 90 per cent of domestic European routes were run as a monopoly; by the end of 1997, this proportion had declined to 81 per cent. On cross-border EU routes, 96 per cent were operated on a monopoly basis in December 1992, falling to 93 per cent by December 1997 (CAA 1998, p. 190). These figures continued to fall and the proportion of monopoly routes within the European Economic Area1 decreased from 76.2 per cent in July 1999 to 73.2 per cent in July 2000.2 Concurrently, intra-EU traffic increased at an average annual rate of 4-5 per cent and commentators such as Barrett (1997) and Morrell (1998) agree that this is due to liberalisation and the resultant market competition - particularly from low price challengers. This view is supported by the EU’s 2000 annual report on the European air travel industry, where it is argued that:
It may be the case that low cost carriers are helping to keep the intra-European passenger forecast higher than would perhaps be expected for a mature market.
