The Political Economy of Liberalising Air Transport in APEC: Regulatory Aspects and Negotiating Options

This study examines the role of regulation and remedial policies for the successful liberalisation of the air transport sector in the Asia Pacific region, and explores negotiating options to maximise the gains from reform. Based on case study analysis, it discusses prominent competition policy and environmental issues arising in the aviation sector and examines initiatives that are being taken to address these concerns. The analysis clearly shows that the once at least partial immunity of air transport from competition law is coming to an end, and that pressure to deal with emissions of greenhouse gas (GHG) from aviation is mounting. There is also growing understanding of these issues and associated best practices are emerging, which could be drawn upon in designing domestic policies. Yet, the unilateral imposition of remedial policies may have wide-reaching consequences for aviation, and a coordinated international response is thus required. The most promising route to reform of the aviation sector appears to be the plurilateral approach. One possible avenue to gradually tackle the most challenging restrictions, in particular ownership rules and cabotage, is the promotion of a liberal policy on wet leasing.