IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v204y2026ics0965856425004458.html

Evaluating the effects of liberalization and modernization policies on aviation in small island developing states

Author

Listed:
  • Café, Eduardo
  • Fageda, Xavier
  • Fioravanti, Reinaldo
  • Gomes, Victor

Abstract

This study analyzes the impact of liberalization and modernization policies on air passenger traffic from the United States (U.S.) to Small Island Developing States (SIDS), with a particular focus on Caribbean countries. Considering these nations’ heavy reliance on international tourism and air transport, the paper examines the effects of Open Skies agreements on passenger volumes on existing routes and the creation of new routes. It also assesses a broader reform implemented in the Dominican Republic, which involved institutional modernization, market liberalization, and compliance with international safety standards. Using U.S.-to-SIDS airport-pair data from 1996 to 2023 and applying methods such as linear probability models and synthetic difference-in-differences, the study finds that Open Skies agreements increase passenger traffic on existing routes but do not lead to the creation of new ones. In contrast, broader reforms—as in the Dominican Republic—boost both traffic and route diversification, even without an Open Skies agreement. The findings suggest that comprehensive reform packages are more effective than liberalization alone in enhancing air connectivity in SIDS.

Suggested Citation

  • Café, Eduardo & Fageda, Xavier & Fioravanti, Reinaldo & Gomes, Victor, 2026. "Evaluating the effects of liberalization and modernization policies on aviation in small island developing states," Transportation Research Part A: Policy and Practice, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:transa:v:204:y:2026:i:c:s0965856425004458
    DOI: 10.1016/j.tra.2025.104812
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965856425004458
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tra.2025.104812?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Lenaerts, Bert & Allroggen, Florian & Malina, Robert, 2021. "The economic impact of aviation: A review on the role of market access," Journal of Air Transport Management, Elsevier, vol. 91(C).
    2. W. Whalen, 2007. "A panel data analysis of code-sharing, antitrust immunity, and open skies treaties in international aviation markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(1), pages 39-61, February.
    3. Zou, Li & Yu, Chunyan & Dresner, Martin, 2012. "Multimarket contact, alliance membership, and prices in international airline markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 555-565.
    4. Nikeel Kumar & Ronald Ravinesh Kumar & Radika Kumar & Peter Josef Stauvermann, 2020. "Is the tourism–growth relationship asymmetric in the Cook Islands? Evidence from NARDL cointegration and causality tests," Tourism Economics, , vol. 26(4), pages 658-681, June.
    5. Micco, Alejandro & Serebrisky, Tomas, 2006. "Competition regimes and air transport costs: The effects of open skies agreements," Journal of International Economics, Elsevier, vol. 70(1), pages 25-51, September.
    6. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.
    7. Dmitry Arkhangelsky & Susan Athey & David A. Hirshberg & Guido W. Imbens & Stefan Wager, 2021. "Synthetic Difference-in-Differences," American Economic Review, American Economic Association, vol. 111(12), pages 4088-4118, December.
    8. 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.
    9. Bilotkach, Volodymyr & Caro-Burnett, Johann & Khan, Ghulam Dastgir & Sembiring, Benny Lala & Yoshida, Yuichiro, 2021. "Measuring the impact of ASEAN Open Skies on international air traffic movements from and to Southeast Asian Cities," Transport Policy, Elsevier, vol. 110(C), pages 368-378.
    10. Porreca, Zachary, 2022. "Synthetic difference-in-differences estimation with staggered treatment timing," Economics Letters, Elsevier, vol. 220(C).
    11. 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.
    12. Roberta Piermartini & Linda Rousov?, 2013. "The Sky Is Not Flat: How Discriminatory Is the Access to International Air Services?," American Economic Journal: Economic Policy, American Economic Association, vol. 5(3), pages 287-319, August.
    13. Abate, Megersa, 2016. "Economic effects of air transport market liberalization in Africa," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 326-337.
    14. Gillen, David & Harris, Richard & Hoon Oum, Tae, 2002. "Measuring the economic effects of bilateral liberalization air transport," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(3-4), pages 155-174, May.
    15. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    16. Liu, Mengting & Wang, Qiang & Jiang, Changmin & Ma, Wenliang, 2025. "The impact of the China-ASEAN Open Skies Agreement on bilateral air transport," Transport Policy, Elsevier, vol. 168(C), pages 69-86.
    17. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
    18. Zou, Li & Curtis, Tamilla, 2025. "The determinants of air travel demand to the Bahamas and its seasonality comparison with cruise travel," Journal of Air Transport Management, Elsevier, vol. 125(C).
    19. Damian Clarke & Daniel Paila~nir & Susan Athey & Guido Imbens, 2023. "Synthetic Difference In Differences Estimation," Papers 2301.11859, arXiv.org, revised Feb 2023.
    20. Grosche, Tobias & Rothlauf, Franz & Heinzl, Armin, 2007. "Gravity models for airline passenger volume estimation," Journal of Air Transport Management, Elsevier, vol. 13(4), pages 175-183.
    21. Chang, Li-Yen, 2014. "Analysis of bilateral air passenger flows: A non-parametric multivariate adaptive regression spline approach," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 123-130.
    22. Fangni Zhang & Daniel J. Graham, 2020. "Air transport and economic growth: a review of the impact mechanism and causal relationships," Transport Reviews, Taylor & Francis Journals, vol. 40(4), pages 506-528, July.
    23. Cristea, Anca D. & Abate, Megersa & Benitez, Daniel A., 2025. "Towards a competitive air transport market in Africa: The role of bilateral air service agreements liberalization," Economics of Transportation, Elsevier, vol. 42(C).
    24. Kumar, Nikeel Nishkar & Patel, Arvind, 2023. "Nonlinear effect of air travel tourism demand on economic growth in Fiji," Journal of Air Transport Management, Elsevier, vol. 109(C).
    25. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    26. Warnock-Smith, David & Morrell, Peter, 2008. "Air transport liberalisation and traffic growth in tourism-dependent economies: A case-history of some US-Caribbean markets," Journal of Air Transport Management, Elsevier, vol. 14(2), pages 82-91.
    27. Clifford Winston & Jia Yan, 2015. "Open Skies: Estimating Travelers' Benefits from Free Trade in Airline Services," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 370-414, May.
    28. Warnock-Smith, David & Christidis, Panayotis, 2021. "European Union-Latin America/Caribbean air transport connectivity and competitiveness in different air policy contexts," Journal of Transport Geography, Elsevier, vol. 92(C).
    29. Abate, Megersa & Christidis, Panayotis, 2020. "The impact of air transport market liberalization: Evidence from EU's external aviation policy," Economics of Transportation, Elsevier, vol. 22(C).
    30. Anca D. Cristea & Russell Hillberry & Aaditya Mattoo, 2015. "Open Skies over the Middle East," The World Economy, Wiley Blackwell, vol. 38(11), pages 1650-1681, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Mengting & Wang, Qiang & Jiang, Changmin & Ma, Wenliang, 2025. "The impact of the China-ASEAN Open Skies Agreement on bilateral air transport," Transport Policy, Elsevier, vol. 168(C), pages 69-86.
    2. Tchouamou Njoya, Eric & Buhari Isah, Aliyu, 2023. "Assessing the economic impact of the single African air transport market: The case of Tanzania," Research in Transportation Economics, Elsevier, vol. 101(C).
    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. Oum, Tae Hoon & Wu, Xiangru & Wang, Kun, 2024. "Impact of air connectivity on bilateral service export and import trade: The case of China," Transport Policy, Elsevier, vol. 148(C), pages 219-233.
    5. Abate, Megersa & Christidis, Panayotis & Purwanto, Alloysius Joko, 2020. "Government support to airlines in the aftermath of the COVID-19 pandemic," Journal of Air Transport Management, Elsevier, vol. 89(C).
    6. Peng, Weichen & Wang, Weicheng & Bai, Xueyan & Wu, Xiangru, 2026. "Evolution of China’s intercontinental air network affected by the COVID-19 pandemic and geopolitical disruptions," Journal of Air Transport Management, Elsevier, vol. 133(C).
    7. Abate, Megersa & Christidis, Panayotis, 2020. "The impact of air transport market liberalization: Evidence from EU's external aviation policy," Economics of Transportation, Elsevier, vol. 22(C).
    8. Cristea,Anca Diana & Abate,Megersa Abera & Benitez,Daniel Alberto, 2022. "Toward a Competitive Air Transport Market in Africa : The Role of Bilateral AirService Agreements Liberalization," Policy Research Working Paper Series 10204, The World Bank.
    9. Cristea, Anca D. & Abate, Megersa & Benitez, Daniel A., 2025. "Towards a competitive air transport market in Africa: The role of bilateral air service agreements liberalization," Economics of Transportation, Elsevier, vol. 42(C).
    10. Huang, Chen & Li, Cong & Liu, Feng & Wei, Sijie & Xu, Ruofei, 2025. "COVID-19 and health inequality: Evidence from risky behaviors," Journal of Comparative Economics, Elsevier, vol. 53(3), pages 856-881.
    11. 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.
    12. Demet Yilmazkuday & Hakan Yilmazkuday, 2017. "The role of direct flights in trade costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 249-270, May.
    13. Abate, Megersa, 2016. "Economic effects of air transport market liberalization in Africa," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 326-337.
    14. Kettlewell, Nathan & Gao, Tiannan, 2026. "Policy or Pandemic? Explaining the Rise in Young Adults’ Private Health Insurance Take-Up in Australia," IZA Discussion Papers 18708, IZA Network @ LISER.
    15. Bilotkach, Volodymyr & Caro-Burnett, Johann & Khan, Ghulam Dastgir & Sembiring, Benny Lala & Yoshida, Yuichiro, 2021. "Measuring the impact of ASEAN Open Skies on international air traffic movements from and to Southeast Asian Cities," Transport Policy, Elsevier, vol. 110(C), pages 368-378.
    16. Kishore, Prabhat & Roy, Devesh & Birthal, Pratap S. & Srivastava, Shivendra Kumar, 2024. "Regulation and Policy Response to Groundwater Preservation in India," Policy Papers 345044, ICAR National Institute of Agricultural Economics and Policy Research (NIAP).
    17. Sun, Meng & Zhao, Naibao & Zheng, Emily Yiying, 2024. "The devil in the air: Air pollution and dementia," Journal of Environmental Economics and Management, Elsevier, vol. 127(C).
    18. Flynn, James, 2025. "Contraceptive access and infant health outcomes," Journal of Health Economics, Elsevier, vol. 104(C).
    19. Wang, Jingyuan & Terabe, Shintaro & Yaginuma, Hideki, 2026. "Evaluating the long-term urban effects of high-speed rail in Japan: An integrated approach using synthetic difference-in-differences and double/debiased machine learning," Transportation Research Part A: Policy and Practice, Elsevier, vol. 203(C).
    20. repec:ags:icar24:345044 is not listed on IDEAS
    21. Anca D. Cristea & Russell Hillberry & Aaditya Mattoo, 2015. "Open Skies over the Middle East," The World Economy, Wiley Blackwell, vol. 38(11), pages 1650-1681, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:204:y:2026:i:c:s0965856425004458. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.