chapter  6
22 Pages

How Liberalization Can Go Wrong: The Case of Alitalia

ByPaolo Beria, Hans-Martin Niemeier, Karsten Fröhlich

Liberalization of air transport has increased economic welfare in the United States of America and in Europe. These effects have been well studied and documented (for the US see Morrison and Winston, 1995; for Europe see Arndt, 2004; a good overview is given by Oum et al., 2009). While in the US private firms were forced to compete and adapt, in Europe state owned firms had time to adapt over the three stages of European aviation deregulation. Some of these former national airlines have been transformed into successful private airlines, while others found it difficult to adapt and some failed. This aspect of the liberalization of air transport has not been well studied.1