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Motivation of Air Transport Control

by:CNS     2021-07-08
The motivation of air transportation control 2021-06-20 16:29:261. The threat of monopolistic power supports the control of airlines. Scholars believe that air transportation has the characteristics of economies of scale, which is manifested in the expansion of the total output on the transportation network. The average transportation cost continues to decline, so the industry tends to have a highly concentrated industrial structure. When economies of scale are large enough to give a single airline a significant cost advantage in a specific air transport market, it is entirely possible for this 'exclusive seller' to directly set prices higher than marginal costs without concern for competitors' entry. Therefore, a small number of giant carriers will dominate the domestic and world air transportation markets. Moreover, as the number of transit passengers and cargo and flights on the airline transportation network that use an important hub airport as a base increases, the average cost will inevitably gradually decrease. Large carriers have even more monopoly power in these markets. Microeconomics theory believes that when economies of scale make the average cost of a firm's output decrease with the entire output that the market can absorb, competition is not necessarily beneficial to the economy. Since a single manufacturer no longer faces direct competition, it will of course have the motivation to limit output, increase prices and obtain monopoly profits. Guangzhou-Zhengzhou Logistics conducts economic control on airlines in order to prevent this from happening. The airport service is at the upstream link of the air transportation production chain and is the basic sector of the air transportation industry. The airport has huge investment, long recovery time, strong capital specificity, and high sunk cost. Therefore, the airport also has a natural monopoly and is a special enterprise with a natural monopoly. Therefore, the construction and operation of the airport must conform to the country's unified planning and layout of the airport, and adapt to and appropriately advance the requirements of urban and regional social and economic development. The construction of airport facilities cannot be repeated. Strict access control must be carried out based on the airport's scale economy effects, land and airspace usage, clearance conditions, collection and distribution conditions, environmental protection requirements, flow design, and investment scale. . 2. Destructive competition Another reason for air transport regulation is to avoid destructive competition (or 'destructive competitionAir transportation, automobile transportation, natural gas and other industries are regulated because if there are no restrictions on price cuts and new entrants, the market may have excessive competition and cause bankruptcy and service interruption. The high fixed cost of establishing and operating air transportation makes the short-term supply elasticity of air services very low, and the supply cannot respond quickly to the cyclical changes in demand. This leads to insufficient supply and rising prices when demand rises. In the long run, competition among airlines will result in prices lower than necessary to maintain the operation of airlines, and even bankruptcy and service interruption. Since the civil aviation industry was regarded as a public and basic industry in the early stage of development, bankruptcy and service interruption caused by destructive competition are undesirable results for a country. The new theory to discuss this point of view is that the aviation industry has an 'empty core' is a term derived from game theory economics, referring to the long-term maintenance of the industry’s equilibrium price mechanism. If the “core” is empty (in the inseparable supply cost This phenomenon occurs when demand can be divided), then market competition will not form an equilibrium price. Industries with 'empty cores' are inherently unstable. In the oligopolistic market structure of air transportation, if competition and freedom are allowed Entering people will make it difficult for companies in this industry to provide continuous services to the society. Therefore, regulatory interventions on airlines (such as tariff control, entry and exit control, anti-monopoly immunity for cartel behavior, etc.) Reasonable. Some scholars believe that the optimal industrial structure of air transport is an oligopoly, and it may be a natural monopoly industry; airlines always tend to take destructive competitive behaviors, if they are not regulated, their own behavior Will destroy the development of the industry.
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