if there was only one supplier for the product I needed then I am obliged to pay the rate they choose
You raise a point that is at the heart of this debate panpanpanpan. The fact that there are 2 airports competing for the same airlines this means that the charges are not at a sustainable level and so long as they fight it out for the business, the airports themselves hand a disproportionate amount of the potential profit over to the airlines, and in the long run the question is all about sustainability.....
it would cost millions to upgrade facilities and infrastructure and who is going to pay?
Again this point is a very simplistic view of the world. I.e yes there would be investment costs but also needs to be considered is what synergies exist by merging 2 teams into 1, there is a lot of duplication and then take out the need for extending runways. Add into the fold a realistic return for the future for reinvestment and also to use to incentivise new routes and services. Finally, it is all well and good but purely looking at this from the customers (end user) is fine but again all parts of the chain need to make a realistic return, i.e. the equation has to be sustainable for all parties concerned.