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.
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
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 
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 . 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 , such as speed, improved areas for...