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An empirical analysis of Canadian international air policy: effects of dual carrier designation and partial liberalization

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  • Clougherty, Joseph A.
  • Dresner, Martin
  • Oum, Tae H.

Abstract

This paper assesses the impact on air traffic of Canada's policy of allowing two Canadian flag carriers (dual-designation) to operate in select Canadian international markets. The secondary objective is to assess the effect of Canada's partially liberalized bilateral air services agreements. Using panel data covering Canada's 33 bilateral markets over the 1982-1994 period, we find the following results: (a) dual designation/operation of Canadian carriers in a country-pair market increases total traffic volumes in the market as well as increases the combined passenger volume and market share of Canadian carriers, and (b) Canada's partially liberalized bilateral air services agreements have significantly increased air traffic in those country-pair markets.Two policy implications follow from this research. First, Air Canada's recent merger with Canadian Airlines is expected to have a significant negative impact on total traffic volumes as well as on Canadian carrier traffic volumes and market shares on the country-pair markets both Air Canada and Canadian served previously. Second, not only the US style full liberal bilaterals or open skies, but also partial liberalization of bilateral markets Canada adopted appears to generate consumer welfare benefits.

Suggested Citation

  • Clougherty, Joseph A. & Dresner, Martin & Oum, Tae H., 2001. "An empirical analysis of Canadian international air policy: effects of dual carrier designation and partial liberalization," Transport Policy, Elsevier, vol. 8(3), pages 219-230, July.
  • Handle: RePEc:eee:trapol:v:8:y:2001:i:3:p:219-230
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    References listed on IDEAS

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    1. Kaduck, Raymon J., 1997. "Canadian carrier strategies and the 1995 open skies agreement," Journal of Air Transport Management, Elsevier, vol. 3(3), pages 145-153.
    2. Dresner, Martin & Windle, Robert J., 1992. "The Liberalization of U.S. International Air Policy: Impact on U.S. Markets and Carriers," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 32(2).
    3. Berlinski, Julio, 1982. "Innovaciones en el proceso y aprendizaje en una planta Argentina de fundición," IDB Publications (Working Papers) 4175, Inter-American Development Bank.
    4. Oum, Tae Hoon & Yu, Chunyan, 1998. "Cost competitiveness of major airlines: an international comparison," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(6), pages 407-422, August.
    5. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
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    1. Tsui, Wai Hong Kan & Fu, Xiaowen & Yin, Chuanzhong & Zhang, Huaxin, 2021. "Hong Kong's aviation and tourism growth - An empirical investigation," Journal of Air Transport Management, Elsevier, vol. 93(C).
    2. Dobruszkes, Frédéric & Mondou, Véronique & Ghedira, Aymen, 2016. "Assessing the impacts of aviation liberalisation on tourism: Some methodological considerations derived from the Moroccan and Tunisian cases," Journal of Transport Geography, Elsevier, vol. 50(C), pages 115-127.
    3. Bernardo, Valeria & Fageda, Xavier, 2017. "The effects of the Morocco-European Union open skies agreement: A difference-in-differences analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 98(C), pages 24-41.
    4. World Bank, 2013. "Republic of Armenia : Accumulation, Competition, and Connectivity," World Bank Publications - Reports 16781, The World Bank Group.
    5. Liu, Shaoxuan & Oum, Tae Hoon, 2018. "Prospects for air policy liberalization in China as a Result of China-ASEAN Open Skies: Changing role of Chinese mega carriers in global scene and anticipated Low Cost Carrier competition," Transport Policy, Elsevier, vol. 72(C), pages 1-9.
    6. Duval, David Timothy & Schiff, Aaron, 2011. "Effect of air services availability on international visitors to New Zealand," Journal of Air Transport Management, Elsevier, vol. 17(3), pages 175-180.
    7. Warnock-Smith, David & O’Connell, John F., 2011. "The impact of air policy on incoming tourist traffic: the contrasting cases of the Caribbean Community and the Middle-East," Journal of Transport Geography, Elsevier, vol. 19(2), pages 265-274.

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