ABSTRACT
Since the health of the airline industry requires a liberal regime with respect to foreign investments, and since there are no legitimate reasons that justify the present restrictive regime, the substantial ownership and effective control principle should be reconsidered. What would be the consequences of an overhaul of the regime? This chapter will address these consequences by, first, studying the legal effects of a liberal regime. It will then focus on the economic benefits for the airline industry of the free movement of capital worldwide. As a third point, the following important issue will be raised: what will be the prospective scenario regarding airline consolidation (e.g. mergers) in the event of total liberalization of the ownership and control rule in the international airline industry?
