Air - Sea Transport: Competitiveness or Complementarity in the Greek insular market?

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This paper deals with the air and coastal shipping industries in the Greek insular

market and the relationship they have developed in the passenger transport area.

This specific geographical region is characterized by a large number of islands

that need regular transport services for the passengers mobility all year round but

especially during the peak summertime season, covering a high level of demand.

There is a considerable number of small regional airports in the islands that

operate as an alternative solution against sea transport, that today has the biggest

transport market share. The article focuses on the notions of competitiveness and

complementarity that may or may not exist between these two transport means.

The above notions are approached through surveys that have been conducted by

the Laboratory of Transport Economics of the Maritime Department of the

University of Piraeus. The market analysis that resulted from the research studies

on the users of both air and sea transport is presented as well as their impact on

the operational policy of the air carriers.

1. Introduction

Sea transport has always been the main way for the transportation of both

passengers and cargo in the Greek insular market. Since the mid of last century

the rapid development of air transport has caused many changes in the transport

market of insular Greece. Can the present situation in the aforementioned region

be characterized as competitive or complementarity between the two modes?

In this question we reply through a survey that took place in three main routes for

both sea and air passengers. In order to format an answer to the above question it

is essential to develop the passenger's profile and therefore the needs that form

the demand for each transport mode.

2. Coastal shipping and air transport passenger market in

insular Greece

2.1 A market analysis

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Up until the beginning of 1990, the Greek air transport market was a

monopolistic one served by the national air carrier Olympic Airways. On July

1991 the internal air transport market was liberalized for airbuses, goods

transport and charter flights. Civil Aviation stays responsible for the provision of

licenses. Since the liberalization new private companies have entered the market,

while in the same year the market share of O.A. was 69% (52% in 1999). Today,

the domestic air transport market has the oligopoly characteristics, since there are

very few operators that are interrelated and depended regarding their decision

making and are offering homogeneous products. Referring to the competition

base air carriers focus on price levels. The price competition strategies, the air

transport companies have developed, have been in favor of big carriers that have

economies of scale and consequently can afford low cost operation.

Coastal transport in the Greek region could be characterized as a diverse,

regulated oligopoly for two main reasons. First of all it posses the two main

characteristics of an oligopoly, that are:

- the existence of a small number of enterprises offering tonnage that are

highly interrelated and depended regarding their decision making

- the offering of homogenous or diverse products [1]

The notion of the 'diversified product' lies within the preferences of its

consumer, whether they are real or deceptive ones, towards the specific product

the oligopoly offers [2]. The main objective for the oligopoly is how to diversify

the offered product always in comparison with the competition. In coastal sea

transport, the involved enterprises are avoiding any price competition and choose

to compete through diversification strategies. The aim is to attract more

passengers focusing on quality factors [3], such as speed, improved areas for...
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