The Determinants of Pricing in the Mexican Domestic Airline Sector: The Impact of Competition and Airport Congestion
29 January 2011
By Dr. Agustin Ros
In this paper, NERA Vice President Dr. Agustin Ros analyzes the impact that low-cost airlines and congestion conditions at the Mexico City airport are having on domestic fares. His principal findings are that low-cost airlines have led to lower fares on many routes, and that all airlines operating out of the Mexico City airport are able to charge a significant premium due to low levels of potential competition. Dr. Ros argues that removing barriers to the entry and expansion of low-cost airlines would result in significant savings to consumers, as would implementing market-based mechanisms to help alleviate airport congestion and assign airport slots more efficiently.
A version of this paper was published in the Review of Industrial Organization, Volume 38, Number 1.
