ABSTRACT
This chapter discusses public-interest principles to be applied when government sets aside competitive-market principles in order to favour certain airlines and/or airline services. In developed capitalist economies, foreign companies are allowed to own enterprises and assets in the domestic economy - except perhaps in few industries that are deemed to be of 'strategic importance'. Airline deregulation rarely allows access to domestic routes by an airline domiciled in another country. Many countries do allow foreign airlines a limited participation in domestic services, provided the foreign company establishes a subsidiary company that is domiciled in the country whose routes are to be served. Given the presence of imperfectly executed government policy-making, and financial interests of airlines, it is not surprising that outcomes sometimes include efficiency losses that are avoidable. In Europe, the self-interest of the separate national governments and their air traffic control (ATC) service providers has hindered the current EU campaign, which seeks only to improve the traditional radar-based system.
