Liberalization of air transport (original) (raw)

Deregulation and Liberalization of European Air Transport Markets

Innovation: The European Journal of Social Science Research, 2001

This paper is concerned with the remaining limitations to full interoperability within the European Union (EU) air transport market. Twenty years ago the European air transport network was fragmented, with airlines being treated as public entities designed to serve largely national interests. Considerable progress has been made in recent years, notably the three 'Packages' of EU legislation, to remove such barriers. The situation still differs in several ways from the almost totally free market that has been in place in the USA since the 1980s but, within the EU, fares and market entry are independent of national frontiers. Some barriers remain, largely legacy effects that are gradually being tidied up, but with some signi cant matters concerning routes outside of the EU and capacity constraints relating to the still largely publicly provided infrastructure still needing resolution. Backgound European Union (EU) air transport is largely international either between EU member states or with third-party countries. 1 While there has been a Common Transport Policy since the signing of the Rome Treaty in 1957, aviation was initially excluded from EU policies. Countries regulated their own domestic aviation and a bilateral system of agreements, evolved from the Chicago Convention of 1944, governed international air transport within the Union, as well as outside it. Policies were concerned with the regulation of scheduled fares, service provision and market entry. Coupled with this was the growth of a very large European charter market that met north-south tourist traf c demands. This market was less rigorously regulated and served by low-cost operators. The EU has also never had a single regulatory body with responsibility for international air transport like the former Civil Aeronautics Board (CAB) in the USA. The international bilateral air service agreements that emerged after the 1944 Chicago meeting and covered services within Europe were piecemeal arrangements, although common motivations often led to standard features. They were generally restrictive and often allowed only one airline from each country to operate a route. While this was similar to the CAB's entry policy to US interstate routes prior to 1978, the European situation was more stringent; over 90% of bilateral agreements involved controlled capacity with obligatory 50:50 revenue pooling. Some 900 of the agreements excluded fth freedom rights. The two countries involved agreed on the air fare, and competitive pricing was excluded. Many of the airlines were state-owned ' ag' carriers and received substantial state subsidies. Within the EU, overlapping philosophies of economic regulation extended into the supply of aviation services and made the creation of a uni ed policy dif cult. The

The good, the bad, and the ugly: 30 years of US airline deregulation

Journal of Transport Geography, 2009

The US airline industry was deregulated in 1978 and has undergone significant changes in industry structure, profitability, employment, passenger volume, and patterns of service and fares, among other characteristics. This paper sets out to make three contributions to the literature as related to the story of airline deregulation. First, discussion of economic theory will provide the context for an updated overview of the positive, negative, and really negative results of US airline deregulation, summarized in the form of ''the good", ''the bad", and ''the ugly". Second, this paper provides a periodization of the 30-year history of US airline deregulation that is important in understanding the cycles of change as reflected in the industry's financial performance and other relevant data. Third, this paper contributes to the renewed debate about the efficacy of deregulation and liberalization policies, particularly at a time when the global financial crisis has cast a harsh spotlight on the (un)desirability of these policies. Some of the good results during the 30 years of airline deregulation, from the industry and consumer perspective, include higher passenger volumes, more service to the most popular destinations, and lower fares on average. Bad results include financial and employment instability, diminution in the quality of airline service overall, and fewer flights and higher fares to smaller places. The recent 2000-2005 period has been particularly ugly, as the airline industry has lost over $30 billion, and several high-profile carriers, such as United, Delta, Northwest, and US Airways, were forced into bankruptcy.

Competition and deregulation: Do air passengers get the benefits?

Transportation Research Part A: Policy and Practice, 2006

It is well established that increased airline competition can produce benefits to passengers, and it is generally assumed that airport deregulation, as part of the same process of liberalisation, will produce similar benefits. But this paper shows that this may not be the case. The potential benefits to passengers from increased airline competition will in general be partially absorbed by increased airport charges at unregulated airports, and in some circumstances this may even result in increases in overall charges, not reductions. This problem is sometimes tackled by putting regulated price caps on aeronautical services, but if these are not extended to the complementary commercial services (such as retailing) which airports also provide then the adverse effects may still occur. Similarly, unilateral deregulation leading to increased airport competition in one country may just lead to the majority of the gains going abroad. Overall, the conclusion is that claims of big passenger gains from deregulation and competition may be exaggerated, and achieving these gains in reality may need subtle and quite far-reaching government intervention.

The Evolution of the Airline Industry: Regulation, Events and Influencing Factors

The Evolution of the Airline Industry: Regulation, Events and Influencing Factors, 2019

This book gives a brief but concise narrative on the evolution of the airline industry from its beginnings to the present day. The focus is on regulations, historic events and influencing factors that shaped the industry. Starting with the Wright Flyer, the book details the early conventions and regulatory framework, the development of the commercial airline industry through the 1930s, World War II and the Chicago Convention, that created the current regulatory framework of the industry. The book then goes into the regulated and protectionist era and developments that eventually led to the deregulation and liberalization of the industry. At this point, the industry transcended from heavy government involvement to an industry driven by economic factors. Following this change, the industry experienced unprecedented growth leading to the formation of the so-called Sixth Freedom airlines, the airline alliances and the low-cost and ultra-low-cost carriers. This book is an excellent guide to how the airline industry evolved into what it is today.

Integration and Concentration of European Air Transport Market

International Journal for Traffic and Transport Engineering, 2013

During the last years air transport stakeholder's behaviors have witnessed deep modifications. Airlines competition has been exacerbated by economic downturns, while airport competition emerged as a result of the less governmental intervention in airport investments. The first result of this process is a mix-model adopted by EU airlines in the domestic market, which implies that network airlines have adopted few of the strategies that have guaranteed the establishment of the low fares carriers, while low cost carriers have been continuously increasing the number of major airport served. The volatility of the air transport deregulated market has been analysed in the scientific literature and these aspects can be perceived as further evidences of the increased volatility. In order to limit the negative effects of volatility in the EU market, air transport players have been sought manners to enhance stability. Airlines mergers or acquisitions, buyout of airport operator's shares by airlines, airport-airline partnership for ad-hoc infrastructure development or buyout of airport's shares by other airport operators are examples of this will for a greater stability of the system. This paper analyses all these aspects highlighting the pursuing of greater stability by the fragile EU air transport system.

Airport Deregulation and Airline Competition

Liberalisation has affected all parts of the air travel industry, with airports as well as airlines increasingly run on commercial lines. This paper models interactions between airports and airlines to show that, for example, the potential benefits to passengers of increased competition between airlines may be (more than) absorbed by the unregulated airports through which they travel, and that effecting airport competition in one country may lead to the majority of the gains going abroad. The policy conclusion is that the (de)regulation of airlines and associated services should be fully co-ordinated and internationally coherent.