Resource information
The dynamism of air traffic markets in
the Middle East obscures the persistence of restrictions on
international competition. But how important are such
restrictions for passenger traffic? This paper uses detailed
data on worldwide passenger aviation to estimate the effect
of air transport policy on international air traffic. The
policy variable is a quantitative measure of the commitments
under international agreements. The paper analyzes, for the
first time, not only bilateral agreements, but also
plurilateral agreements such as the one between Arab states.
The analysis finds that more liberal policy is associated
with greater passenger traffic between countries. Higher
traffic levels appear to be driven primarily by larger
numbers of city pairs being served, rather than by more
passengers traveling along given routes. To demonstrate the
quantitative implication of the estimates, two
liberalization scenarios in the Middle East are evaluated.
Deepening the plurilateral agreement among Arab states would
lead to a 30 percent increase in intraregional passenger
traffic. Widening the agreement to include Turkey would
generate significantly larger gains because current policy
vis-à-vis Turkey is much more restrictive.
