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3.12 - Air transportation for effective and efficient service to small more remote communities: Policy options under regulatory reform

Project Description

The last decades have witnessed a global trend toward airline deregulation, with significant impacts on national provisions for air service to smaller communities. One of the consequences of liberalization is that the carriers are no longer constrained to serve routes, and may thus neglect service to less profitable destinations with lower density traffic. Deregulation can therefore have detrimental effects on small remote centers.

Though many governments agree on the obligation of continuing service to these communities, there is no common accord on how national air transportation policies should be designed to support this objective. Some nations have opted for full deregulation and have sustained the service through subsidies paid to carriers competing for contracts, others chose to maintain the status quo and yet others carry on lighter forms of regulation in hybrid forms. Different national contexts also mean that a solution appropriate for one country may not be the most successful for another.

The working hypothesis is that the analysis of multiple worldwide experiments with air service of small remoter communities will allow the identification of best practices. The main argument is that the policy design that works better in each case can be acknowledged, and thus provide a good starting point for further policy formulation and recommendations.

The exploration of the world best practices in policy design is developed from the evaluation of mature experiences of the U.S.A., and Canada and the Northern Territories, and the assessment of progress toward deregulation in countries like Portugal, Spain, and Brazil, according to two criteria: effectiveness and efficiency. The study will make recommendations for the design of air transportation policies for countries where deregulation and the provision of small communities are under discussion, derived from the reference cases.

Keywords: Air Transportation policy, Deregulation, Small communities, Basic Air Service, U.S.A., Canada, Portugal, Spain, Brazil.

Research Team

Alda Metrass Mendes (PhD student, MIT Portugal)

Álvaro Costa (supervisor, FEUP)

Richard de Neufville (supervisor, MIT)

Financial Support

Financial support from Fundação para a Ciência e Tecnologia (FCT), Portugal: Ph.D. grant (SFRH/BD/35149/2007) within the MIT-Portugal Program.

Stage of Progress

Started on September 2007
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