Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2014:23: Economic effects of air transport market liberalization in Africa

Megersa Abate ()
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Megersa Abate: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: Although the aviation industry is increasingly becoming important for Africa's economic development and integration, the ability of airlines to access foreign markets remains hindered by restrictive regulatory policies. Attempts have been made to fully liberalize the intra-African air transport market. Except for general assertions about the merits/demerits of liberalization, our empirical understanding of the welfare effects of such polices in Africa remains rudimentary. This study empirically measures the economic effects of air transport liberalization, mainly on two supply side variables: fare and service quality, measured as departure frequency. The results show up to 40 % increase in departure frequency in routes that experienced some type of liberalization compared to those governed by restrictive bilateral air service agreements. While the effect of liberalization is substantial in improving service quality, there is no evidence of its fare reducing effect.

Keywords: Air transport; Liberalization; Yamoussoukro decision; Bilateral air service agreements

JEL-codes: L51; L93; R40

28 pages, November 11, 2014

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