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Economic Regulation of Air Transport (Part 1): Introduction

Dr. Albert Plesman Airport

The international standards for operating air services between countries were established by ICAO in 1944. Bilateral air services agreements have been the main way of regulating air transport relations among states ever since.

The bilateral air services agreements that regulate the international air transport between two countries have often imposed limitations on the route options, the flight frequency and the designated carriers for each party. These restrictions have affected the competitiveness and efficiency of the aviation industry in both countries.

One of the key sectors that countries compete for is air transportation, as it has significant economic and political implications. Typically, each country has one or more flag carriers, which are airlines owned or supported by the government, that represent its interests in bilateral or multilateral agreements. These agreements aim to balance the market share and the benefits of each party's designated airlines.

The international air transport market has become more liberalized over the past 30 years, as many governments have recognized the advantages of market forces in shaping and enhancing the growth of air services. In a globalized economy, this allows for more efficiency, innovation and competition in the aviation sector.

The “Open Skies” policy, initiated by the US in 1992, has enabled carriers to enjoy unrestricted access to any route between the two countries that sign such an agreement. This policy has removed limitations on capacity, frequency or price, allowing carriers to compete freely and offer more options to consumers.

The EU single aviation market, established in the 1990s, transformed the air transport sector in Europe by replacing the bilateral agreements between EU Member States with a common regulatory framework. This enabled more competition, lower fares, and greater connectivity for passengers and businesses.

The EU has gradually expanded its external aviation policy to align with other countries and regions. It has signed comprehensive and liberal air transport agreements with several third countries, especially those with high growth potential. This proactive external aviation policy is a crucial element of the Aviation Strategy for Europe.

To be cont'd

PMC Global Aviation
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