European and American approaches to air transport liberalisation: Some implications for small communities

This paper looks at the impact of the European Union (EU) ‘Third Package’ of Liberalisation measures on small communities. The liberalisation package came into effect on 1 January, 1993 and allows for free entry on intra-European routes and freedom by carriers to set passenger fares and cargo rates. It is shown that in the case of the US, deregulation there produced many benefits to the travelling public. For small communities, the detrimental impacts of competition, namely a focus by carriers on the larger centres, were lessened with the introduction of the ‘Essential Air Services Programme’ in 1978. This programme ensured that a basic level of air services was provided to designated small communities even if subsidies were required. The EU liberalisation does not include administrative or financial provision for an equivalent programme. The case of the Irish regional airports is presented to highlight the detrimental impact of competition and liberalisation on small communities. These regional airports are vital to economic development in several peripheral regions of Ireland but ae experiencing a reduction or removal of air services because carriers wish to focus on the more lucrative high density intra-community routes. A strong case is put forward for an EU-wide Essential Air Services Programme, so that the benefits from the EU-wide liberalisation package may be extended in a fair and transparent manner to small communities.