Air Passenger Transport In The APEC: Regulatory Impacts and Prospects for Asia Pacific Integration

Massimo Geloso Grosso ()
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Massimo Geloso Grosso: The OECD Trade and Agriculture Directorate, Postal: The OECD Trade and Agriculture Directorate

Journal of Economic Integration, 2012, vol. 27, 312-327

Abstract:

This study aims at assessing the prospects for a more liberal air passenger transport regime in the Asia Pacific region under the auspices of the Asia Pacific Economic Cooperation (APEC). The decades-old bilateral air services regime has been under pressure to reform for several years. Notwithstanding the critical role that international air transport plays in the ongoing integration of Asia Pacific economies, the airline industry remains one of the region’s most heavily regulated. Estimates from the gravity equation employing the Air Liberalization Index (ALI) developed by the World Trade Organization (WTO) Secretariat find a positive and statistically significant relationship between relaxing bilateral air services restrictions and air passenger traffic. The results hold for a wide range of specifications controlling for fixed effects, different sample sizes, and for all variants of the ALI. The preferred specification, the Anderson and Van Wincoop (2003) equation, provides the most conservative estimates. Prior to taking account of general equilibrium effects, the results imply that if APEC economies eased air transport restrictions to double the ALI scores with their aviation partners, both within and outside the APEC region, traffic would increase by 4.5%.

Keywords: Air transport; Asia Pacific; Trade Policy (search for similar items in EconPapers)
JEL-codes: F13 F15 L93 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0575

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