ABSTRACT

Air transport in Europe has been highly regulated, based on national sovereignty and non-competing national airlines. Air transport between European countries was typically confined to the national carriers of the countries concerned, with independent airlines excluded from the market as were third-country airlines. The fares charged were agreed upon by the airlines in advance and ratified by governments. Market capacity was also decided in advance, as was its division between the airlines. This regulatory system was frequently criticised because it resulted in high fares and high cost airlines. The fares charged by European scheduled airlines have traditionally been the highest in the world and approximately three times those charged by Europe’s charter airlines, which operated under a more competitive regulatory system.