ENHANCING COMPETITION IN THE PRESENCE OF MONOPOLY - AN ASSESSMENT OF AIR POLICY OPTIONS FACING CANADA

A decade of adverse financial performance has resulted in the emergence of a single national carrier in Canada. The single carrier outcome was both unavoidable and predictable. This paper explores available policy options to enhance competition in this environment. The paper examines the current monopoly situation in the domestic airline markets. It speculates on some of the possible impacts on domestic travelers, both from the perspective of fares and that of service quality. It reviews several policy options which might be employed to counter the emerging trends, and concludes that the auctioning of units of airport capacity provides the most promising approach.