Impact of Total Liberalization of Domestic Air Transport on the Social Welfare and on the Dynamic of Competition: Comparison Between United States and the European Union

摘要

Since Apr 1,1997 the implementation of the third package of the liberalization, air transport within the european Union has become totally liberalized. In the United States the deregulation of domestic air traffic was earlier and faster since it took place in October 1978 after the adoption of the only act of deregulation. This paper, in its first part, deals with the liberalization of the industry of air traffic in the european union. We present several aspects such as the evolution of the competitive structure of the intra-european routes, the level of airport dominance and the growth of hub structure. The second part of the paper presents models of entry in the airline industry. As profitability of route flown explains correctly decisions taken by airlines to serve or not a route, the paper focuses on the specification and the estimation of the determinants of city pair profitability in the european union.