ABSTRACT
How does competition operate in the passenger aviation market? Does it differ from other service industries? And what types of policy instruments might be needed to ensure that airline customers receive good service at competitive prices? In particular, is easing actual or potential entry, as through an ‘open skies’ treaty, a good substitute for actual competition ‘in the air’ between incumbent operators? These are questions addressed in this chapter, using a case study of a particularly interesting aviation market: the set of routes linking cities in New Zealand with cities in Australia, these being approximately 2,500 kilometres apart, across the Tasman Sea.
