To says that services of airports are natural

To
begin with, a lot of textbooks usually use airline market as an example of true
oligopoly. However, in Belarus, airline market consists only of one company
called “Belavia-Belarusian Airlines” and does not have large competition even
from other countries airlines. So, let us consider why. To do this, closer look
on a monopoly is needed. Dilts (2004) states that “The assumptions of the
monopoly model are:

(1)
there is a single seller (or a few sellers who collude, hence a cartel)

(2)
the single seller offers a unique product

(3)
entry and generally exit are blocked

(4)
the monopolist dictates price in the market” (p. 179).

First
of all, it is worth mentioning that “Belavia” is legally Joint Stock Company,
but parent company is the Government of Belarus. In 2016, the government entrusted
“Grodno-avia” to open new airline. First, nothing has happened since 2016; second,
undoubtedly, competition is something that Belarusian market needs, but anyway,
high prices will not change, because these airlines belong to Belarusian
government. Perloff (2012) states that monopolies are usually created with
government’s support; also, in some cases, governments control and manage
monopolies. Belarusian law says that services of airports are natural
monopolies, which also give “Minsk National Airport” and “Belavia” market power
and ability to forbid entering the market to other companies. “Belavia” does
not cover all flights from “Minsk National Airport”, of course, we can choose
“Aeroflot”, “LOT” or other companies and buy their tickets. However, the number
of other companies’ flights is relatively small. Let us consider one year from annual
report of both companies in details. Throughout 2014, “Belavia” transported 1,973,000
passengers; meanwhile, “Minsk National Airport” served 2,593,500 passengers. Dividing
one number by another, we get approximately 76,07%, which states that “Belavia”
is not only single official Belarusian airline, but also that it does not face
large competition from other companies. An example of ticket’s price: tickets
Minsk-Barcelona-Minsk cost 315,26 EUR, tickets Vilnius-Barcelona-Vilnius cost
129,98 EUR.

Oligopoly
is “a market with only a few firms and with substantial barriers to entry”. (1)
“Oligopolistic firms may act independently or may coordinate their actions. A
group of firms that explicitly agree (collude) to coordinate their activities
is called a cartel. These firms may agree on how much each firm will sell or on
a common price. By cooperating and behaving like a monopoly, the members of a
cartel collectively earn the monopoly profit—the maximum possible profit”. (1)