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On quasi-competition on the Russian passenger air transport services market and on the new transportation company emergence opportunities

Published in № 4(10) 01 july 2008 year
Rubric: Industry competition
Authors: Luk`yanov S. A., Kislyak N. V., Tissen E. V.

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The authors examine what the main barriers are that are hampering the process of the new com¬panies' entrance into the passenger air transport market. The examination is based on the findings of the comprehensive research conducted during the winter of 2007-2008. All the RF air transport companies' information was analyzed. We have come to a conclusion that there are significant structural, technology and attitudinal barriers that hamper the process of the new companies' en¬tering into the sector market. That means that today there is a quasi-competition in this modern Russian economy. The barriers' height in the sector was examined empirically, and the respondents say that the barriers created by the administrative officials make the most significant contribu¬tion to the competition curbing. In some of the Russian regions the only airport and the air transport company available are owned by the same entity or they are managed by the affiliated companies. This leads to the high business concentration and an artificially created monopoly. Our analysis has shown that such vertically integrated structures influence in some complex way the level of the social well-being. The article authors examine the ways that could be used to overcome the barriers. They use the econometric analysis methods to show that concluding a franchise agreement is an efficient way to overcome the barriers that hamper the new companies' emergence in the Russian passenger air transport services sector.