ABSTRACT
Airline managers are not free agents. Their actions are circumscribed by a host of national and international regulations. These are both economic and noneconomic in character and may well place severe limitations on airlines’ freedom of action. An examination of the scope and impact of such regulations is crucial to an understanding of the economics of international air transport. For more than three decades the regulatory framework remained largely unchanged. It was three sided, based on bilateral air services agreements, inter-airline agreements and the tariff agreements of the International Air Transport Association (IATA). This chapter examines this traditional framework of economic regulation, which in many respects still stands. Chapter 3 then considers the arguments for and against economic regulation and evaluates the impact of international deregulation which began in the United States in the late 1970s, while Chapter 4 traces the development of liberalization in Europe.
