Consolidation and Rationalization in the Transatlantic Air Transport Market – Prospects and Challenges for Competition and Consumer Welfare

Abstract:     
The Discussion Paper examines the regulation of the air transport sector from the perspective of competition law, focusing specifically on EU-US air transport relations. Emphasis is placed on the ongoing negotiations between Europe and the United States for the creation of a transatlantic open aviation area, where American and European airlines will operate freely without restrictions on traffic rights, subject solely to common rules agreed between the parties. In 2007, the first-ever EU-US Air Transport Agreement was reached, followed, in 2010, by a second-stage agreement. All efforts are now concentrated on the conclusion of the final agreement. Given that the transatlantic air transport market accounts for almost 60% of world traffic, the conclusion of the final agreement will signal the creation of the biggest liberalized airspace in the world. The prospects and challenges thereof are expected to be major and are examined from the perspective of the consumers, the airline industry and the law itself. The first part of the paper is a flight into the past, tracing the regulation of air transport from the birth of civil aviation up until today. The second part is a flight into the future, aspiring to foresee how smooth or turbulent the transition to the new regime is going to be. Given that the successful application of the final agreement is dependent upon effective regulatory cooperation aimed ultimately at regulatory convergence, the analysis looks into the prospects and challenges associated with regulatory convergence at both sector-specific and general competition law level.

Number of Pages in PDF File: 43

Keywords: air transport regulation, open skies agreements, EU-US Air Transport

JEL Classification: K21, K23

working papers series