Effects Of Open Skies Agreement

This document measures the impact of OSA on bilateral passenger flows and trade in services for a country. Although the United States has negotiated so-called « open skies » agreements with 11 of the 15 countries of the European Union, the United States and Europe maintain significant restrictions on transatlantic competition and investment in air transport. This distorts competition and reduces the ability of carriers to adapt to market conditions. To arrive at these aggregate figures, we studied three different efficiency effects that would have an open aviation zone. Our analysis – the first rigorous assessment of the impact of the open skies agreements – shows that, overall, these agreements have led to a 10% increase in the number of transatlantic passengers. Extrapolating, we calculated that removing the remaining restrictive bilateral agreements would generate a profit of at least 2.2 million passengers per year, mainly on US-UK routes, and an increase in consumer benefits of between $600 million and $1.5 billion per year. This is a lower estimate, as it is based on the effects of bilateral open skies agreements and open airspace would allow for even greater liberalisation. Using Canadian data, a DID regression will be performed to test the impact of the Canadian OSA and the U.S. OSA on passenger flow and trade in services.

Thirdly, the abolition of the four open non-ski agreements would lead to an increase in passenger traffic. Current bilateral agreements between the United States and Great Britain, Greece, Ireland and Spain limit the number of transatlantic voyages. To assess the impact of replacing these restrictive bilateral agreements with an open air zone, we used regression analyses to calculate the impact of the open skies agreements between the US and other EU countries in the 1990s, which replaced equally restrictive agreements. Dorothy Robyn, a senior consultant at the Washington-based Brattle Group, describes the benefits of an open-air transatlantic deal for consumers and airlines. By allowing airlines unlimited access to our partners` markets and being able to fly all intermediaries and the most remote, open skies agreements offer maximum operational flexibility for airline alliances. Open skies agreements have significantly expanded international passenger and cargo flights to and from the United States, fostered more travel and commerce, increased productivity, and fostered quality employment opportunities and economic growth. Open skies agreements do this by eliminating state intervention in air carriers` commercial decisions on routes, capacity and prices and by enabling airlines to provide more affordable, convenient and efficient air services to consumers. In this document, we measure the impact of the Ski Air Services Agreement (OSA) on bilateral passenger flow and export and import trade for a country..

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