A Comprehensive Study of Air Transport Liberalization Through the Lens of Strategic Airline Alliances
Air & Space Law 44, no. 4&5 (2019): 347–392.
45 Pages Posted: 5 Jun 2020
Date Written: June 11, 2019
The present study examines the issue of the liberalization of air transport through the lens of strategic airline alliances. Alliances are seen as a corollary to the suboptimal regulatory framework governing international civil aviation, stemming from ‘the nationality rule’. The ‘nationality rule’ provides that majority ownership and effective control of an airline must be vested in the country that designates it. This requirement has nurtured the establishment of national airlines and has prevented the industry from consolidating out of fear that traffic rights, negotiated bilaterally between States, will be lost. What is more, it has locked States into a ‘prisoner’s dilemma’, stalling liberalization. Airlines have reacted by forging alliances to emulate mergers and reap merger-like efficiencies. The present study examines the way that the airline industry has positioned itself strategically within the suboptimal regulatory framework in order to unleash the benefits of liberalization. It finds that the model of open skies, metal neutrality and antitrust immunity, pioneered by KLM and Northwest in 1992, has embedded a degree of de facto liberalization. Twenty-five years after its introduction, this model seems to have exhausted its liberalizing potential, threatening to lock States into yet another prisoner’s dilemma. The International Civil Aviation Organization (ICAO) is presently preparing a broad programme to deal with a wide variety of aspects of air transport liberalization, including airline alliances. The present study aims to contribute to the ICAO’s research effort and, more broadly, to the long list of works on air transport liberalization.
Note: “Reprinted from Air & Space Law, Vol. 44, No. 4&5 (2019): 347–392 , with permission of Kluwer Law International.”
Keywords: Liberalization, open skies, airline alliances, metal neutrality, antitrust immunity, nationality restrictions, competition, ICAO
JEL Classification: K20, K21, K29, K33, K39, R40, R49
Suggested Citation: Suggested Citation