Competition versus Predation in Aviation Markets

Chapter 7Airline Predation in Canada

Scott M. Butler

Introduction¹

Aviation history is littered with failed airlines. Some have suggested that there is no natural equilibrium in a de-regulated airline industry,² only a constant state of flux. This constant rise and fall of new airlines has led to many accusations of predatory behaviour, few of which have proved to withstand the scrutiny of the legal system. The most notorious recent example is the American Airlines case, where Judge J. Thomas Marten wrote in his judgement:

There is no doubt that American may be a difficult, vigorous, even brutal competitor but here it engaged only in bare, not brass knuckle competition.

Indeed, to understand airline predation, one might ask Vanguard, Sun Jet ...