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published_or_final_version / Business Administration / Master / Master of Business Administration

published_or_final_version / Business Administration / Master / Master of Business Administration

published_or_final_version / Transport Studies / Master / Master of Arts

Thesis (M.C.P.)--Massachusetts Institute of Technology, Dept. of Urban Studies and Planning, 1980. / MICROFICHE COPY AVAILABLE IN ARCHIVES AND ROTCH. / Includes bibliographical references. / by Alan Chat-Fun Eng. / M.C.P.

published_or_final_version / Urban Planning / Master / Master of Science in Urban Planning

Contemporary trends in civil aviation show a noticeable tendency towards integration of national airline enterprises in many regions of the world. This attitude springs from the economic realities of air transport, the progress of which has been retarded generally by excessive competition and, in certain particular regions, also by such factors as shortages in financial resources and experienced personnel, inadequate equipment, and, at times, inherent difficulties in the operation of air services. [...]

This thesis provides a comprehensive review of recent developments in the economic regulation of air transport in the Asia-Pacific region. The focus is on the progressive liberalisation of the designation criteria in selected agreements. A brief historical overview is followed by a summary of the decision of the European Court of Justice in the "open skies" cases. The thesis then examines three recent Asia-Pacific agreements: the Australia - New Zealand arrangements; the APEC Multilateral agreement; and the Pacific Islands agreement. This review is followed by a discussion of some potential developments in the region that could lead to the conclusion of a new multilateral agreement between the European Union and selected Asia-Pacific States.

In the last decade, the European air transport industry has undergone a process in several stages of transition towards a single market. Liberalization has been closely linked to the effective application of the state aid rules of the EC Treaty. / In principle, direct aid to undertakings within the common market is not prohibited by the state aid rules in the Treaty. However, aid granted by Member States that distorts or threatens to distort competition by giving one airline an unfair advantage over its competitors, and in so far as it affects trade between Member States, is incompatible with the Treaty. Certain mandatory or discretionary exemptions may apply to aid to airlines providing that the measure fulfills the conditions and requirements as stated by the Treaty. The European Commission and the EFTA Surveillance Authority have a wide discretion in deciding whether or not certain aid measures fall within the stated exemptions. Where the market forces alone are not able to achieve the desired results or if they are only able to do so in a limited capacity, such exemptions may be warranted to the extent not contrary to the common interest. / A special mechanism is in place to ensure that state aid is properly scrutinized in the light of the demands of the Treaty and the EEA Agreement. The EC Commission or the EFTA Surveillance Authority must be notified of all aid measures in order to assess their compatibility with state aid rules.

The formation of airline alliances has been a distinctive feature of the airline business at the threshold of the new millennium. This is due to the framework of Bilateral Air Transport Agreements, which condition the grant of traffic rights to substantial ownership and effective control being vested in nationals of one of the contracting parties. Further regulatory aspects pertaining to airline alliances include competition law review, traffic rights, and slot allocation. / This thesis seeks to elucidate how Star had to adapt its strategic choices to this framework. The outcome will be that in particular the lack of regulatory convergence in competition law matters constitutes a hindrance to a global alliance such as Star. The issue of ownership and control might represent a further obstacle to an alliance intending to rely on mergers or major share holding, an ambition that Star has not nourished so far. Open Skies agreements in force between the U.S., Canada, and several member states of the European Union give alliances full commercial opportunities, unhindered by restrictive capacity or approval of fares provisions. The principles as regards slot allocation, on the other hand, have enabled alliances to build up their hubs as fortresses. / The issues of competition law, and ownership and control illustrate that it has become increasingly insufficient to rely on a merely bilateral approach to global problems. Eventually, satisfactory solutions may only be achieved on a multilateral level. The onus thus is on aviation regulators to come up with a more suitable framework for aviation in the next century. / Multilateralism, however, might turn out to herald the end to the alliance phenomenon. Once the bilateral strait jacket put aside, the aviation industry will consolidate like any other industry: by mergers, that is.