Liberalization of Air Transport Services and Passenger Traffic

WTO Staff Working Paper ERSD-2008-06

31 Pages Posted: 14 Dec 2008 Last revised: 18 Feb 2009

See all articles by Roberta Piermartini

Roberta Piermartini

World Trade Organization (WTO) - Economic Research and Analysis Division

Linda Fache Rousová

European Central Bank (ECB)

Date Written: December 2008

Abstract

Using a gravity-type model to explain bilateral passenger traffic, this paper estimates the impact of liberalizing air transport services on air passenger flows for a sample of 184 countries. We find robust evidence of a positive and significant relationship between the volumes of traffic and the degree of liberalization of the aviation market. An increase in the degree of liberalization from the 25th percentile to the 75th percentile increases traffic volumes between countries linked by a direct air service by approximately 30 per cent. In particular, the removal of restrictions on the determination of prices and capacity, cabotage rights and the possibility for airlines other than the flag carrier of the foreign country to operate a service are found to be the most traffic-enhancing provisions of air service agreements. The results are robust to the use of different measures of the degree of liberalization as well as the use of different estimation techniques.

Keywords: Bilateral air service agreements, air transport, air service trade liberalization, gravity model, passenger traffic, open skies agreements

JEL Classification: F15, L93

Suggested Citation

Piermartini, Roberta and Fache Rousová, Linda, Liberalization of Air Transport Services and Passenger Traffic (December 2008). WTO Staff Working Paper ERSD-2008-06, Available at SSRN: https://ssrn.com/abstract=1315204 or http://dx.doi.org/10.2139/ssrn.1315204

Roberta Piermartini (Contact Author)

World Trade Organization (WTO) - Economic Research and Analysis Division ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland
+41 22 739 5492 (Phone)
+41 22 739 5762 (Fax)

Linda Fache Rousová

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
698
Abstract Views
2,593
rank
53,417
PlumX Metrics