Originally Posted by clubeurope

I am referring to the market of Hong Kong based airlines, and no, a monopoly isn't necessarily a pure monopoly.

Bear in mind that a monopoly would imply one company dominating the market, but not necessarily the only firm in the market, at least in practice.

If CX buys Hong Kong Airlines and Hong Kong Express, all the passenger airlines in HK will be owned by CX, thus giving CX a monopoly power over the Hong Kong air routes. Given the many, considerably more favourable slots owned, CX would thus gain an ability to charge a premium over routes covered non-stop.

Given the barriers of entry that CX will be able to impose (owning majority of slots in slot-limited airport, having more non-stop flights, having the most desirable real-estate (lounges, gate slots in main terminal), and the having the most desirable time slots) CX does get the opportunity to deter other airlines from entering the market and expecting high revenue and/or profit from the route, and thus is in monopoly of the local airline market. Thus, the assumption would be that, CX will then be able to make abnormal profits. All of these are assumptions of a monopoly.

With HX charging much cheaper prices in HK right now, CX can't do that.

And no, CAN and SZX are not considered perfect substitutes to Hong Kong and many people are less likely to fly there and connect by other means to HK than for them to fly non-stop.

Thanks for your offer, but no, you can keep the economics book for yourself.