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Paper on Air Transport Liberalisation

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Paper on Air Transport Liberalisation

As a taxpayer in a Country with a national airline that operates most routes under restrictive Air Service Agreements and making losses, I do support the liberalisation “Open Skies” of the air services market. Currently, the Bilateral Air Services Agreements (BASAs) specify which airlines could operate between the two countries, the routes carriers could operate (e.g., which airports they could fly to), whether carriers could offer beyond services (fifth freedom rights), limits on the frequency and capacity (seats) that the carriers could operate, and often place controls over airline pricing. As a result, the development of regional and international air service has been as much a function of government policy as it has been a function of commercial considerations. In addition, the Bilateral Air Services Agreements have also placed foreign Ownership and control restrictions on the airlines. Typically, the ownership restrictions specify the maximum percentage of airline shares that can be owned by foreign nationals. However, despite all these restrictions our national airline has continued making losses.

Arguably, the most prominent and comprehensive example of liberalisation has been the European Union (EU) single aviation market. Between 1987 and 1993, the EU introduced three packages of reforms that almost fully deregulated the EU air market. Carriers from the EU were free to operate any route within the EU, without restriction on price or capacity, including cabotage (i.e., domestic air travel with a member state, which has been permitted since 1997). In addition, all restrictions on airline ownership have been removed for EU citizens (e.g., an air carrier operating from Italy can be 100% owned by investors from the UK; however, investment by non-EU citizens is restricted to 49%). A 2003 study by the European Union...

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