Liberalization of Air Transport
Gudmundsson, S., 2011. Liberalization of Air Transport. In: (Eds.) Finger, M. and Künneke, R. International Handbook on the Liberalization of Infrastructures. Edward Elgar Pub., pp. 234-251.
40 Pages Posted: 8 Apr 2012 Last revised: 23 Nov 2014
Date Written: 2011
Several countries and regions have liberalized air transport markets, spearheaded by the US Deregulation Act of 1978, and later, air transport liberalization in the European Union. The historic and political drivers and expectations associated with liberalization are examined and how the regulatory environment developed during the post deregulation years both in the US and Europe. Four principal areas of regulatory reforms in air transport are covered: (1) domestic markets; (2) air services agreements; (3) associated services; and (4) inter-regional open aviation areas. Examples of each type are discussed, such as: US Deregulation and EU liberalization; Open Skies air services agreements; ground-handling, charter and air cargo liberalization; and the European Common Aviation Area (ECAA) and the EU-US Open Aviation Area (OAA). The chapter covers the common industry expectation of stability and equilibrium in deregulated air transport markets, and the role of entry and exit costs. A brief history of market entry is covered, including new entrant failures and successes, and how the incumbent airlines adjusted to the new competitive environment. The chapter concludes by questioning if raising regulatory barriers will either achieve industry financial stability or raise consumer benefits in the long-term.
Keywords: Deregulation, liberalization, open skies, open aviation area, airline failures, airline market entry, air transport economics, air transport regulation, incumbent airlines, European Union, industry stability, regulatory reform, aviation, air transportation
JEL Classification: l00,l5,l8,l9,l93,n7
Suggested Citation: Suggested Citation