1st Edition

Liberalization in Aviation Competition, Cooperation and Public Policy

    The last few decades have witnessed substantial liberalization trends in various industries and countries. Starting with the deregulation of the US airline industry in 1978, regulatory restructuring took place in further network industries such as telecommunications, electricity or railways in various countries around the world. Although most of the liberalization movements were initially triggered by the worrying performances of the respective regulatory frameworks, increases in competition and corresponding improvements in allocative and productive efficiency were typically associated with the respective liberalization efforts. From an academic perspective, the transition from regulated industries to liberalized industries has attracted a substantial amount of research reflected in many books and research articles which can be distilled to three main questions: (1) What are the forces that have given rise to regulatory reform? (2) What is the structure of the regulatory change which has occurred to date and is likely to occur in the immediate future? (3) What have been the effects on industry efficiency, prices and profits of the reforms which have occurred to date? Liberalization in Aviation brings together renowned academics and practitioners from around the world to address all three questions and draw policy conclusions. The book is divided into five sections, in turn dealing with aspects of competition in various liberalized markets, the emergence and growth of low-cost carriers, horizontal mergers and alliances, infrastructures, and concluding with economic assessments of liberalization steps so far and proposed steps in the future.

    1: Introduction and Overview; A: Liberalization and Airline Competition; 2: Market Entry and the Evolution of the US Airline Industry 1995–2009; 3: Competition among European Airlines – on the Role of Product Differentiation; 4: Airline Competition in Connecting Markets; 5: Airline Competition in Liberalized Markets: Effects on Thin Routes; 6: How Liberalization Can Go Wrong: The Case of Alitalia; 7: Airline Liberalization and Implications for Safety: A Theoretical and Empirical Conundrum; B: Liberalization and Low Cost Airline Competition; 8: Liberalization of Air Transport in Europe and the Evolution of ‘Low-cost' Airlines; 9: Low-cost Carrier Services in Germany and Europe – from Novel to Normal; 10: À la Carte Pricing to Generate Ancillary Revenue: The Case of Ryanair; C: Liberalization and Airline Cooperation; 11: An Assessment of the Success of Cross-border Airline Mergers and Acquisitions in Europe; 12: Open Skies and Antitrust: Do We Need Them Both? A Review of the Air New Zealand Cases; 13: The Impact of Liberalization on Cross-border Airline Mergers and Alliances; 14: Economic Effects of Antitrust Immunity for Airline Alliances: Identification and Measurement; 15: Parallel Frequent Flier Programme Partnerships: Impact on Frequency; D: Liberalization and Infrastructure; 16: Airport Traffic Growth and Airport Financial Performance; 17: Deregulating Ground Handling Services in Europe – Case Studies on Six Major European Hubs; 18: Comparative Inefficiencies of Various Air Navigation Service Systems; E: Liberalization and Public Policy; 19: Economic Impact of Aviation Liberalization; 20: European Liberalization: A View From Afar; 21: Economic Evaluation of Air Services Liberalization: The New Calculus; 22: Multilateral interlining in Deregulated Air Transport Markets; 23: US Bilateral Air Transport Policy; 24: Canadian international Aviation: Policy and Challenges


    Peter Forsyth has been Professor of Economics at Monash University since 1997. His research has been on applied microeconomics, with particular reference to the economics of air transport, tourism economics and of regulation. He has recently published a jointly edited book on Airport Competition the European Experience, Ashgate. Recent work has involved using computable general equilibrium models to assess the economic impacts of tourism, including events, and in analysing tourism and aviation policy issues. David Gillen is YVR Professor of Transportation Policy in the Sauder School of Business and Director Centre for Transportation Studies, University of British Columbia. In addition he is Research Economist at the Institute of Transportation Studies at the University of California, Berkeley. David has published more than 100 books, technical reports, journal papers, conference presentations and other articles in various areas of transportation economics, including airline competition and industry structure, airport economics and noise externalities, and transportation policy in Canada and the United States. Kai Hüschelrath is Senior Researcher in the Department of Industrial Economics and International Management at ZEW Centre for European Economic Research in Mannheim, Germany. In addition he is Assistant Professor for Industrial Organization and Competitive Strategy at WHU Otto Beisheim School of Management in Vallendar, Germany. His research focuses on various areas of competition policy and competitive strategy including market definition, collusive practices, mergers and market entry. Hans-Martin Niemeier is Director of the Institute for Transport and Development of the Bremen University of Applied Sciences and Chairman of the German Aviation Research Society. He is known for his work on airport privatization, regulation and performance of European airports. A former airport regulator, he has previously conducted studies on the market power of Amsterdam airport, the role of benchmarking in incentive regulation of European airports and the performance of Norwegian airports. Hartmut Wolf is Professor of Trade, Logistics and Maritime Economics at the Flensburg University of Applied Sciences. In addition, he is associated Economist at the Kiel Institute for the World Economy. His research focuses on international transport markets and institutional aspects of the provision of infrastructure services and institutional economics.

    ’This book is an excellent review of the liberalization in aviation that took place in the past three decades. It gives a comprehensive and thorough analysis of the following important questions: what are the forces that led to regulatory liberalization? What are the regulatory changes that occurred to date and what is likely to happen in the future? What effect have the regulatory reforms had on the industry, infrastructure and players? This is a must read book; one for every researcher and graduate student to have in the office or library.’ Tae H, Oum, The University of British Columbia, Canada and Chairman, The Air Transport Research Society ’The airline industry has both facilitated and benefited from the globalization resulting from trade liberalization in the past 60 years. Yet aviation itself remains far from being completely liberalized. Despite the economic benefits resulting from the liberalization that has taken place there are many political barriers hindering further progress. The importance of this book is the rigorous insight it gives into a wide range of aviation liberalization issues by gathering together the work of the key scholars in this field. This is a book of policy relevance that should be read by regulators as well as academics.’ Brian Pearce, Chief Economist, International Air Transport Association, Geneva and Visiting Professor Cranfield University Department of Air Transport, UK ’This book is a fine read, diversified and enriching. It can be recommended to academics as well as airline in-house or external counsel to get a better understanding of the forces and constraints of the regulatory regime of the airline and aviation industry.’ Zeitschrift für Luft- und Weltraumrecht (German Journal of Air and Space Law), vol 63, 01/2014 ’Perhaps the greatest value of the book lies in its bringing together a large body of analytical work on airline liberalisation, work which might otherwise have been scattered widely ac