Contestability and Sustainability in Regional Airline Markets*

Since 1979, entry into the varied South Australian air passenger market has been unrestricted. This paper analyzes what has happened during the last four years with particular reference to the theory of contestable markets. Analysis shows that new firms have entered the market, services have increased significantly, new routes have been developed and that there is no apparent difference in the structure of fares on multi-firm and single-firm (monopoly) routes.