Economic development and the impact of the EU–US Transatlantic Open Skies Air Transport Agreement

Abstract

This article examines the economic impacts on the United States east coast regions of the EU–US Open Skies Agreement that liberalized air service over the North Atlantic. It considers the link between air travel volumes before and after the Agreement and the economies of the main metropolitan areas. It finds, using a number of model specifications, that the economic impacts of air traffic increased after the enactment of the Agreement.

Keywords:

• international aviation
• trade in services
• aviation markets
• economic development

JEL Classification:

• R40
• L51
• L93

Notes

¹ A complete list is provided at website http://www.state.gov/e/eb/rls/othr/ata/114805.htm

² The original Agreement was between the 27 member states of the European Union and the United States; Norway and Iceland were incorporated in 2011. When Croatia joined the European Union in July 2013, it also became part of the arrangement.

³ There are other provisions governing such things as safety and environmental protection; see http://www.state.gov/e/eb/rls/othr/ata/e/eu/

⁴ Button (1999) provides a foundation for examining the full implications of the EU–US agreement, and Pitfield (1999) highlights on the data requirements for a full analysis.

⁵ Under the US Federal Aviation Administration’s definition, a large primary hub airport handles over 1% of the country’s annual passenger boardings.