Cities That Are Served By 2+ Airports: In Which Cases Do These Airports Compete?

In my thinking about my upcoming trip to Australia, New Zealand, Korea, and Japan, I’ve been thinking about competition between different airports. One of the pieces of information that led me down this rabbit hole is that I realised Seoul Incheon doesn’t operate a single domestic flight. Well, that’s not entirely true – Korean Air operates three “transit-exclusive domestic flights” (TEDF) between Incheon and Busan, though that’s it. There are up to 130 flights between Seoul and Jeju (island in South Korea), and none of them depart from Incheon Airport. I later learned that Incheon and Gimpo are operated by the same authority, and have a somewhat strategic split between Incheon doing international flights, and Gimpo doing domestic flights (and a couple of regional ones, including the flight I’ll be taking to Tokyo Haneda).

This got me thinking – do airports generally compete with one another? The answer is sometimes – I thought it’d be worth outlining which cities have airports that compete against one another, which cities don’t, how they compete, and whether at all that matters for passengers.

Cities with airports that compete

Here’s a non-exhaustive list of big cities with airports that compete with one another:

• London – Heathrow (LHR), Gatwick (LGW), Stansted (STN), Luton (LTN), City (LCY) and Southend (SEN) are all privatised and compete with one another
• Tokyo – Haneda (HND) and Narita (NRT) compete with one another
• Bangkok – Don Mueang (DMK) and Suvarnabhumi (BKK) compete with one another
• New York – JFK, LaGuardia (LGA) and Newark (EWR) compete, even though they are operated by the same authority
• Belfast – Belfast International (BFS) and George Best Belfast City (BHD) compete
• Toronto – Pearson (YYZ) and Billy Bishop (YTZ) compete on some shorthaul traffic, though obviously there is no risk of longhaul traffic being moved. Both airports also compete with Hamilton (YHM) Airport
• Mexico City – Mexico City (MEX) and Felipe Ángeles (NLU) Airport compete, and the government incentivises competition here by actively diverting traffic to NLU
• Chicago – O’Hare (ORD) and Midway (MDW) compete on shorthaul
• Los Angeles basin – LAX, Hollywood Burbank (BUR), John Wayne (SNA), and Ontario International (ONT) all compete
• San Francisco – SFO competes with Oakland (OAK) and San Jose (SJC)
• Miami/Fort Lauderdale – MIA and FLL compete

These are just examples of airports that compete with one another. What this means is that the airports fight for airlines to secure slots at their airports, and offer operational advantages and differentiated fee structures for airlines. Each airport is a traffic loss risk for the other.

For passengers, this means that airports fight for better route choices, connection opportunities, and faster improvement cycles to the passenger experience.

JFK vs. LGA vs. EWR is a bit of a special case – they’re run by the same authority, but compete for investment allocation (incl. terminal upgrades, lounges, etc.), airline co-investment, and role dominance as New York’s favourite airport

Cities with airports that do not compete

Here are examples of cities with airports that don’t compete, either because regulators manage the airports to prevent competition, or because the airports themselves are operated by the same authority:

• Seoul – Incheon (ICN) and Gimpo (GMP) purposefully serve different markets – there is some competition between Gimpo’s regional international flights and Incheon’s, though this is very limited
• Taipei – Taoyuan (TPE) and Songshan (TSA) do not compete, and serve different markets
• Shanghai – Hongqiao (SHA) and Pudong (PVG) don’t compete, and have centrally planned strategies, with PVG only operating feeder traffic on domestic routes, and SHA operating minimal international routes
• Milan – Malpensa (MXP) and Linate (LIN) don’t compete, however Bergamo (BGY) does compete with them
• Paris – Charles de Gaulle (CDG) and Orly (ORY) don’t compete, however Beauvais (BVA) does compete with them
• Beijing – Daxing (PKX) and Capital (PEK) don’t compete
• Istanbul – IST and Sabiha Gökçen (SAW) are a managed dual-airport system and do not compete
• Dubai – Dubai International (DXB) and Dubai World Central (DWC) don’t compete

Istanbul and Sabiha Gökçen Airport are actively managed against competition, to keep IST as the full-service mega-hub (including for Turkish Airlines), and SAW as the low-cost carrier hub

How do airports compete?

Generally, airports compete not directly for passengers to choose them, but rather for airlines to do business with them, and for government authorities to invest in them. Of course, airlines launch routes based on passenger trends, so it matters where people enjoy flying in and out of.

For example, at an airport such as Heathrow (LHR), the slots themselves aren’t the problem. Heathrow is heavily slot-constrained, and has a huge waiting list of airlines who would pay a fortune to get a slot there. However, it still competes for general prestige, keeping its role as London’s mega-hub and protecting traffic from leaking elsewhere. The airport also competes against other major European hubs to be a transit point for passengers headed to secondary European cities (or even between the U.S. and Asia/Africa), though that’s for another post.

Meanwhile, airports such as Gatwick (LGW) try and divert traffic away from Heathrow, win decisions for airline growth, as well as win funding for expansion. For example, if an airline decides to launch their A321XLR route to London Gatwick instead of London Heathrow, that’s a win for Gatwick and a risk for Heathrow. Similarly, if Gatwick wins investment for some terminal upgrades, that’s an opportunity cost for investments that could be made at Heathrow (and there are many!).

Gatwick has an incentive to redirect airline investment and funding away from Heathrow, so it can become a better and more popular airport

Meanwhile, other airports will strategically place airlines so that there is no competition. For example, both Paris-CDG and Paris-Orly (ORY) are operated by Groupe ADP (ADP stands for Aéroports de Paris). Both airports have heavy slot-constraints, and the government doesn’t allow airlines to freely move capacity between airports. Both airports are pretty much equidistant from the city centre and are the same price to get to, and the airport experience is designed to be very similar.

On a side note, this is why you’ll see British Airways divesting to Gatwick and launching longhaul flights out of Gatwick Airport, whereas Air France doesn’t have the same freedom out of Paris-Orly. Air France is only permitted to do limited regional flying out of Orly with no transfer dependence, and will probably never be able to launch a longhaul flight out of there.

Regulation prevents ORY and CDG from ever being true competitors

Should passengers care?

So why should passengers care? On the surface level, they shouldn’t, and this shouldn’t stop you from booking a flight out of the airport that suits you best.

However, from an expectation management perspective, it’s interesting to know which airports compete and which don’t. For example, when you book a flight out of Tokyo, you’ll know that Narita and Haneda are both fighting to make the experience more pleasant for you, so you’ll choose that airport again in the future. However, if you book a flight out of Seoul, that same incentive doesn’t exist (this doesn’t mean Incheon doesn’t compete with other regional hubs).

This may also explain some pricing trends. Airports may offer better pricing incentives for airlines due to competition, who may in turn bring down pricing for passengers. In all cases, there are a multitude of other factors that affect the overall pricing picture – so I’m not saying that pricing will always be identical if you’re trying to find a flight between Orly and London, for example (in fact, that’s far from the truth). However, airport competition is more likely to affect pricing for cities where airports do compete, compared to where airports do not.

Now that Porter is running their brand new E195-E2s out of Pearson (YYZ), Billy Bishop Airport (YTZ) has incentives to lower pricing for Porter

Conclusion

I thought it was so fun to think about whether airports compete, and how the ownership and competition structure of different airports leads to different pricing decisions and passenger experience investments. Next time I fly out of Tokyo, Toronto or San Francisco, I’ll definitely keep an eye out on how the airport I’m flying out of is differentiating themselves from the competition.

Are there pieces of the picture I’m still missing?