Regionalism in International Civil Aviation: A Reevaluation of the Economic Regulation of International Air Transportation in the Context of Economic Integration

Abstract:     
While the WTO Agreement liberalized trade in goods and services on a universal multilateral basis, hard rights in air services were excluded from this agreement. Indeed, the economic regulation of international air transportation still adheres to a relatively restrictive regulatory framework of bilateral treaties first developed in the 1940s. While the trend in international air transport regulation is to liberalize market access to foreign carriers, significant barriers still exist, among other things, in the form of restrictions on total market access and limitations on foreign ownership of airlines. This paper presents economic integration as one means to progressively “open up” the air services industry. Economic integration provides evidence of the political will to cooperate necessary to achieve further liberalization. Furthermore, such units provide important economic incentives to liberalize air transport. Finally, regional economic integration organizations may enhance the bargaining position against larger, more mature markets while protecting interests in “own” carriers. This paper examines the underlying economic reasons for air transport liberalization on the basis of regional economic integration. It further addresses the legal implications and constraints involved in establishing regional interests in air transportation, and highlights some policy considerations for “re-focusing” interests from states to regions.

Number of Pages in PDF File: 20

Keywords: air transportation, integration, regionalism

JEL Classification: K23, K33

Accepted Paper Series