Arab Passengers’ Airlines Framework and Performance

Abstract

Since the early 1980s, the international market of airline passengers is witnessing major turbulences. While in the USA, the EU or the ASEAN different strategies have been adopted to face the new situation, Arab countries show no clear strategy. Given the importance of this market for labor and nonlabor mobility in the Region, this paper investigates the impact of further liberalization on passengers and on welfare. To this end, an Indicator of Openness was computed and incorporated into an econometric model. The results show that increased competition decreases fares as well as carriers’ revenue but increases consumer surplus. The computed net effect on society welfare is positive.

Keywords:

• Arab airlines
• competition
• welfare