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Direct and indirect competition

Direct competition

Analyzing the level of dependence of European airports on particular airlines (under the Herfindahl-Hirschman – HHI concentration index, which reaches a value of 11 thousand where the offer of an airport is completely handled by a single airline), it emerged that Malpensa airport is the European medium-large airport (second overall after Venice) with the lowest level of dependence on a single airline.

This sets it apart from other Continental airports such as Amsterdam, Frankfurt, Zurich, Paris or Vienna, where the principal airline accounts for around 50% of ASKs.

Direct competition development at Milan Malpensa

HH index on ASK 533 539 519
No. airlines 88 80 86
Entropy index on ASK 1.50 1.50 1.51
% ASKs of leading 5 airlines  41.7 42.0 40.7
% ASKs of leading airline 14.3 13.5 13

Source: ICCSAI Fact Book

Direct competition development at Milan Linate

HH index on ASK 3,191 3,090 2,986
No. airlines 22 20 18
Entropy index on ASK 0.79 0.81 0.82
% ASKs of leading 5 airlines  77.9 76.3 76.7
% ASKs of leading airline 54.6 53.8 52.7

Source: ICCSAI Fact Book

Linate airport shows a higher traffic concentration level than Malpensa owing to the significant presence of Alitalia, which is responsible for approximately 53% of the total ASKs. In Italy, the airport where the largest share of ASKs held by a single carrier is Bergamo: approximately 80% of supply is attributable to Ryanair.

Direct competition is measured also by another indicator called the entropy (H) index, which calculates (also in terms of ASK or seats) if the share of the airport offer is equally divided between all airlines present.

Therefore, low index values indicate situations in which the traffic offer of a particular airport is highly concentrated. Also according to this index, Malpensa airport was the absolute leader in Europe with regard to the lowest dependence on an individual airline.

Indirect competition

The level of indirect competition refers to each route offered by a specific airport for which alternative routes are offered by other airports close to that considered, for neighboring destinations or on similar routes.

The “proximity” concept relating to departing airports and destination airports concerns those located within 110 km.

The exposure of an airport to indirect competition is one of the elements taken into account when considering whether an airport is a natural monopoly.

Indirect competition at Milan Malpensa

No. neighboring airports 3 3 3
No. routes in indirect competition 100 76 83
Competitor ASK /ASK in competition 1.43 1.52 1.41

Source: ICCSAI Fact Book

Within Europe, the London area contains a high number of active airports, therefore in indirect competition.

Nearly all departing European routes from Gatwick or Heathrow have indirect alternatives.

Indirect competition is significant also in the Lombardy region close to Milan. From Malpensa, over 93% of European destination routes are open to competition from other airports in the area such as Linate and Orio al Serio.

Malpensa airport placed third, after London Heathrow and Gatwick airports, in terms of intensity of indirect competition. The ratio between the alternative offer volume of the competing regional airports (including Linate) and the offer of the airport concerning the routes subject to competition is greater than one.