Copenhagen Economics has conducted a study for the Swedish provider of air navigation services, ACR Aviation Capacity Resources AB.

A large part of the Swedish market for air navigation services was opened up to competition from 1 September 2010. There has, however, been uncertainty regarding the joint terminal zones. Joint terminal zones are a part of the lower air space servicing more than one airport, for example around Stockholm and Malmo.

In April 2012 a government investigator concluded that for economic reasons, it would be better not to expose air navigation services in joint terminal zones to competition. The investigator’s arguments were based on economic theory saying that competition would result in high transaction costs, low effectiveness, and poor coordination.

Copenhagen Economics concludes that the investigator draws the wrong conclusion. The supposed high transaction costs are founded on a clear economic misperception, the supposed low effectiveness is implausible and undocumented, and an on-going monopoly would be a non-proportional solution to problems with complex coordination. Hence, the study concludes that there are good reasons to hold on to the original decision from the Swedish regulatory authority Transportstyrelsen and let competition reign, also within joint terminal zones.

The full report (in Swedish) can be downloaded here

For further information please contact Partner Claus Kastberg Nielsen