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This entry proposes an integrative approach to assessing market power in airport retail environments that highlights the impact of strategic and operational factors on the performance of the enterprise in a regulated and restrictive commercial environment. Using the Analytic Hierarchy Process (AHP), this entry discerns and quantifies important factors determining market power using weights that include price flexibility, consumer conduct, brand value, technological uptake rate, and barriers to entry. To support this qualitative analysis, this entry combines a quantitative countervailing power model (CPA/E) and a market penetration model (MPE/A) to determine the levels of retailer penetration in airport authorities and passenger markets. The integration of these models makes it possible to perform a multivariate analysis of market domination, geographical interdependence, and bargaining power. The findings highlight the configurational complexity in strategic positioning in terms of organizational size, dependence levels, and digital preparedness and provide actionable information for airport managers, concession planners, and policymakers determined to maximize lease deals and improve commercial performance in the face of changing risk profiles.
airport management
airport business
market power
decision-making
concession agreement
Over the past two decades, the aviation industry has witnessed profound changes that have imposed major implications for airport business models and the retail environments of airport complexes. A range of influences, including the commercialization of airport management, the formation of partnerships, as well as mergers and acquisitions along the supply chain, combined with a general trend toward privatization, have cumulatively changed airport governance models and economic policies. Most notable is the corporatization of landside operations and the expansion of concession-based activities, which have focused the attention of airport management on an ever more market-driven and competitive context. Such structural changes have increased competition in the business environment, notably for non-aeronautical enterprises, while also reconfiguring the boundaries and barriers to entry in traditional aeronautical service domains [1][2].
In the context of continued growth, the concept of market power has become an important factor in examining the dynamics involved in the intricacies of retailing at airports. In this context, market power refers to the ability of business organizations—namely, retailers and service operators—to influence prices, restrict supply, and increase profitability through the leveraging of distinctive structural and contextual benefits. The most obvious of these benefits is the locational monopoly enjoyed by airports. Passengers essentially form a captive market, faced with limited opportunities for off-airport purchase or dining, thus allowing airport retailers to charge high prices [3]. In addition, the imposition of leasing restrictions and exclusivity agreements often leads to a limited number of suppliers dominating key retail categories, which reduces competition and widens profit margins [4].
Passenger behavior further underpins this market leadership. Time-constrained travelers tend to prioritize convenience over price, suggesting reduced price sensitivity and a greater willingness to spend on required products and services [5]. In response to this behavior, airport retailers differentiate through customized product ranges, high service levels, and loyalty-generating initiatives. The arrival of digital transformation, including personalized marketing, app ordering, and omnichannel retailing, has further allowed retailers to improve consumer engagement and operational efficiency [6]. A growing body of literature supports these observations. Studies have shown that aspects of flight schedules, airport layout, and length of stay are critical determinants of consumer behavior and spending patterns [7][8]. Moreover, the influences of brand exclusivity, limited price comparability, and digital integration all combine to create a distinct retail setting characterized by the structural advantages and predictability of consumer behavior. Moreover, airport retail’s resilience in the face of crises, such as the COVID-19 pandemic, demonstrates the industry’s ability to evolve through dynamic adjustments in pricing models, the restructuring of services, and inventory management [9].
This entry attempts to measure both the degree and type of market power in the context of airport retail, highlighting its impact on corporate performance and its role in promoting regional market development. Utilizing the Analytic Hierarchy Process (AHP), this entry delineates and ranks the primary indicators of market power, examining their implications in terms of retail productivity and resource allocation in the context of the airport setting. These findings present important implications for airport managers and retail concession operators, especially in the development of concession contracts and the creation of viable business practices [6]. This research ultimately contributes to the literature on competitive strategy, business development, and economic planning in the airport sector. It presents a structured framework for measuring the performance of retail markets under conditions of unique constraints but considerable opportunities—highlighting the ways in which the strategic management of market power can balance commercial success with goals of sustainable regional development.
References
- Polk, A.; Bilotkach, V. The assessment of market power of hub airports. Transp. Policy 2013, 29, 29–37.
- Little, A.D. Mastering Airport Retail. 2009. Available online: https://www.adlittle.com/sites/default/files/viewpoints/ADL_Mastering_Airport_Retail.pdf (accessed on 12 April 2025).
- Dimitriou, D.; Sartzetaki, M. Assessment of Socioeconomic Impact Diversification from Transport Infrastructure Projects: The Case of a New Regional Airport. Transp. Res. Rec. J. Transp. Res. Board 2022, 2676, 732–745.
- Oxera & CMS. Market Power Assessments in the European Airports Sector. 2017. Available online: https://www.oxera.com/wp-content/uploads/2019/01/Market-power-assessments-in-the-European-airports-sector-1.pdf (accessed on 12 April 2025).
- Shiyas, M.; Kumar, C.; Ganguly, A. The Role of Airport Retailing in Building Resilient and Sustainable Airport Businesses. Int. J. Innov. Ind. Revolut. 2024, 6, 254–267.
- Dimitriou, D.; Sartzetaki, M.; Karagkouni, A. Managing Airport Corporate Performance: Leveraging Business Intelligence and Sustainable Transition; Elsevier: Amsterdam, The Netherlands, 2024.
- Li, S.; Pawlak, J.; Sivakumar, A. Implications of air travel shopping for non-aeronautical revenue streams: A cross-national empirical analysis. J. Air Transp. Manag. 2024, 119, 102638.
- Wu, C.-L.; Chen, Y. Effects of passenger characteristics and terminal layout on airport retail revenue: An agent-based simulation approach. Transp. Plan. Technol. 2019, 42, 167–186.
- Dimitriou, D.; Sartzetaki, M. Criticality of a regional airport development to mitigate covid-19 economic effects. Case Stud. Transp. Policy 2022, 10, 581–590.
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Encyclopedia of Entrepreneurship in the Digital Era
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20 May 2025
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