AIR TRANSPORT LIBERALIZATION
In 1944, ICAO set the standards, bilateral air services agreements (asas) by which international air services between countries operates. These agreements have been traditionally restrictive in terms of possible routes, the maximum of allowable flights, and the air carriers permitted to operate under the respective ASA.
THE EFFECTS OF LIBERALIZATION
Countries achieved rapid economic development by leveraging their liberalized air transport systems.
The most prominent and comprehensive example of liberalisation is the EU single aviation market that resulted in an almost fully deregulated EU single aviation market. Its creation has enabled significant development of the European aviation sector and contributed to a nodemocratization of air transport.
The impact of EU aviation policy on countries outside of the EU has been equally positive: EU – level aviation agreements aim to “create new economic opportunities, “ensure market access, promote investment opportunities, and facilitate air travel”.
Thus, it is undeniable that liberalization has contributed to increased air service levels and lower fares, which in turn has stimulated traffic volumes and led to economic growth and employment and GDP.
liberalization has led to substantial economic and traffic growth. Such positive effects are mainly due to increased competition in the aviation market, which reduces price and stimulates traffic growth, producing efficiency gains as a result of carriers’ ability to optimize their network and pricingy strategies. In addition, the increased competitive pressure forces which airlines to improve productivity and induces inefficient carriers to leave the market.
Liberalization allows carriers to better structure their networks to cover intra/intercontinental markets. However, optimal benefits will only be achieved if ownership restrictions are eased, allowing optimization across borders.
The emergence and growth of low-cost carriers, made possible through liberalization, has brought significant positive Impacts to the airline industry. The fast growth of LCCs has led to increased competition and reduced fares in liberalized markets, such as Europe. In the EU, lccs have benefited from liberalization of beyond rights by establishing airport bases across borders. On the other hand, existing regulations on route entry, ownership and effective citizen control have constrained the expansion of LCC in many markets.
The ICAO World Aviation Forum has called on States to include in their national development plans and to position aviation as a strategic priority for the development of their countries. This is because aviation stimulates employment, trade, tourism and other areas economic development at the national, regional and international level. Liberalization will enhance connectivity and promote the economic benefits that connectivity affords. Furthermore, a liberal environment will best lead to the sustainable development of international air transport.
Liberalization of the aviation system has achieved significant progress, as exemplified by the emergence of strong and competitive carriers, airports that are more user-friendly, optimized airspace, the sustained growth of air traffic, and enhanced connectivity between States and regions. Most importantly, liberalization has allowed for greater choice and more competitive prices for the traveling public. The States around the world to continue to liberalize their air transport systems in order to further promote economic development and prosperity.