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The impact of air transport market liberalization: Evidence from EU's external aviation policy

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  • Abate, Megersa
  • Christidis, Panayotis

Abstract

Following the decision of the European Court of Justice in 2002, which overruled its member countries’ Bilateral Air Services Agreements (BASAs), the EU has been negotiating Air Services Agreements as a block with third countries within the framework of its External Aviation policy. This paper explores whether routes governed by this policy have lower fares and higher service quality and load factors compared to those governed by BASAs, as would be expected in a liberalized air transport market. By analyzing traffic flows over 14 years between 28 EU countries and 27 external partners on 4 continents with which the EU has varying degrees of liberalization, we find that the external policy leads to 6% - 23% reduction in fares. Lower fares in turn spurred a 27% increase in demand and led to higher levels of capacity utilization.

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  • Abate, Megersa & Christidis, Panayotis, 2020. "The impact of air transport market liberalization: Evidence from EU's external aviation policy," Economics of Transportation, Elsevier, vol. 22(C).
    • Handle: RePEc:eee:ecotra:v:22:y:2020:i:c:s2212012218300819
    DOI: 10.1016/j.ecotra.2020.100164
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    8. Warnock-Smith, David & Christidis, Panayotis, 2021. "European Union-Latin America/Caribbean air transport connectivity and competitiveness in different air policy contexts," Journal of Transport Geography, Elsevier, vol. 92(C).
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    10. Christopher Findlay & Hein Roelfsema & Niall Van De Wouw, 2021. "Feeling the Pulse of Global Value Chains: Air Cargo and COVID-19," Working Papers DP-2021-23, Economic Research Institute for ASEAN and East Asia (ERIA).

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