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PCC Issues Paper No. 01, Series of 2020 PAPER ISSUES The State of Competition in the Air Transport Industry: A Scoping Exercise Gilberto M. Llanto and Ma. Cherry Lyn Rodolfo The State of Competition in the Air Transport Industry: A Scoping Exercise The State of Competition in the Air Transport Industry: A Scoping Exercise I. INTRODUCTION policies which relate to (i) the opening up Gilberto M. Llanto and Ma. Cherry Lyn Rodolfo1 of regional airports to international flights, This study reviews the state of competition (ii) reciprocity as to whether it hinders in the domestic air transport industry, penetration of regional airports by foreign Published by: specifically focusing on the airline carriers; and (iii) the overall air transport passenger business. In reviewing the policy objective of the government, will Philippine Competition Commission business and economic landscape of remain unaddressed. Despite this limitation, 25/F Vertis North Corporate Center 1 the industry, it considers factors such as the report tries to provide a substantial North Avenue, Quezon City 1105 the market structure of the domestic air analysis of the present situation of the transport industry, the economic incentives2 industry and the competition-related that motivate the airline companies to issues faced by the industry, the public and behave in a certain way, and the regulations3 government. affecting the industry. The study turns to Williamson’s (1975) idea that organizations After a brief introduction, Section 2 presents review organizational costs and configures an overview of the air transport industry a governance structure that minimizes costs and uses an aviation services market value and maximizes revenues subject to the chain as a neat frame for understanding how constraints of extant policy and regulatory several entities collaborate and coordinate PCC Issues Papers aim to examine the structure, conduct, and performance of framework.
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