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Air Passenger Transport In The APEC: Regulatory Impacts and Prospects for Asia Pacific Integration

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  • Grosso, Massimo Geloso

    () (The OECD Trade and Agriculture Directorate)

Abstract

This study aims at assessing the prospects for a more liberal air passenger transport regime in the Asia Pacific region under the auspices of the Asia Pacific Economic Cooperation (APEC). The decades-old bilateral air services regime has been under pressure to reform for several years. Notwithstanding the critical role that international air transport plays in the ongoing integration of Asia Pacific economies, the airline industry remains one of the region’s most heavily regulated. Estimates from the gravity equation employing the Air Liberalization Index (ALI) developed by the World Trade Organization (WTO) Secretariat find a positive and statistically significant relationship between relaxing bilateral air services restrictions and air passenger traffic. The results hold for a wide range of specifications controlling for fixed effects, different sample sizes, and for all variants of the ALI. The preferred specification, the Anderson and Van Wincoop (2003) equation, provides the most conservative estimates. Prior to taking account of general equilibrium effects, the results imply that if APEC economies eased air transport restrictions to double the ALI scores with their aviation partners, both within and outside the APEC region, traffic would increase by 4.5%.

Suggested Citation

  • Grosso, Massimo Geloso, 2012. "Air Passenger Transport In The APEC: Regulatory Impacts and Prospects for Asia Pacific Integration," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 27, pages 312-327.
  • Handle: RePEc:ris:integr:0575
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    Cited by:

    1. Dettmer, Bianka & Freytag, Andreas & Draper, Peter, 2014. "Air Cargo beyond Trade Barriers in Africa," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 29, pages 95-138.
    2. Massimo Geloso Grosso & Hildegunn Kyvik Nordås & Asako Ueno & Frederic Gonzales & Iza Lejárraga & Sébastien Miroudot & Dorothée Rouzet, 2014. "Services Trade Restrictiveness Index (STRI): Transport and Courier Services," OECD Trade Policy Papers 176, OECD Publishing.

    More about this item

    Keywords

    Air transport; Asia Pacific; Trade Policy;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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