In this paper, we analyze how an airline can take advantage of airport dominance of a whole network in a market characterized by short-haul routes and congestion. We estimate an equation system, which is based on theoretical grounds, for the Spanish market. We find that costs and demand benefits of airport dominance have to do with providing a high flight frequency. The high flight frequency that comes from the control of an airport network allows to be offered large discounts in fares to leisure travelers while charging higher fares for business travelers. Such benefits can seriously damage the competitive status of airlines that do not have a high airport presence. We conclude that a balanced allocation of airport slots is required to guarantee airline competition.

Key words: Competition, air transport, multiple equation models.
JEL classification: L13, L93, C30.