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Liberalization of air transport services and passenger traffic

Roberta Piermartini and Linda Fache Rousová

No ERSD-2008-06, WTO Staff Working Papers from World Trade Organization (WTO), Economic Research and Statistics Division

Abstract: We find robust evidence of a positive and significant relationship between the volumes of traffic and the degree of liberalization of the aviation market. An increase in the degree of liberalization from the 25th percentile to the 75th percentile increases traffic volumes between countries linked by a direct air service by approximately 30 per cent. In particular, the removal of restrictions on the determination of prices and capacity, cabotage rights and the possibility for airlines other than the flag carrier of the foreign country to operate a service are found to be the most traffic-enhancing provisions of air service agreements. The results are robust to the use of different measures of the degree of liberalization as well as the use of different estimation techniques.

Keywords: Bilateral air service agreements; air transport; air service trade liberalization; gravity model; passenger traffic; open skies agreements (search for similar items in EconPapers)
JEL-codes: F15 L93 (search for similar items in EconPapers)
Date: 2008
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