Thursday, May 26, 2011
According to a recent story, India will refrain from entering into anymore air services agreements until at least 2014 in order to give its national carrier, Air India, an opportunity to return to profitability. See Air India Plans to Restrict Competition on Global Routes to Bounce Back to Profit, Travel Biz Monitor, May 25, 2011 (available here). India is currently an Open Skies partner with the United States. Though the story did not indicate that the Indian Government planned to denounce any of its existing bilaterals, it is not out of the question that policymakers may choose to dial-up protectionism in order to aid their ailing carrier.
There is an irony in all of this. The International Civil Aviation Organization's fourth Air Services Negotiation Conference is scheduled to take place in Mumbai this October. According to ICAO's website, "This event is primarily organized for aviation negotiators from different States to conduct bilateral (and regional or plurilateral if so desired) air services negotiations or consultations in a central meeting place." Despite playing host to the Conference, apparently India will be sitting this one out.
Tuesday, May 24, 2011
Blog readers may be interested in Jan Abrell's working paper, Private Transport and the European Emissions Trading System: Revenue Recycling, Public Transport Subsidies, and Congestion Effects (May 17, 2011) (available from SSRN here). From the abstract:
From 2012 onwards, the European Emission Trading System regulates the carbon emissions of electricity generation, refineries, energy intensive production, and aviation. Beside the fuel efficiency regulation of cars, there exists no European approach of carbon regulation in the private transport sectors. However, half of the income of allowance auctioning has to be used for implementing environmental improving policies including public transport subsidies. Using a Computable General Equilibrium model of the German economy, we show that exempting transport from carbon pricing but recycling revenues via public transport subsidies is welfare enhancing. By including congestion effects into the model we show that such a recycling scheme has the potential of negative gross cost of carbon regulation by reducing congestion and global pollution externalities.
Monday, May 23, 2011
Blog readers may be interested in Justin Dickerson's new working paper, Antitrust in the Skies: The United and Olympic Airlines Mergers (May 12, 2011) (available from SSRN here). From the abstract:
This Article explores the 2010 merger of United Airlines and Continental Airlines - which usurped Delta’s briefly-held title as the world’s largest airline - as well as the failed merger of Greece's two largest airlines, Olympic Air and Aegean Airlines, and the antitrust considerations associated with each of these transactions. Part II of this Article details the United and Continental merger, explaining pertinent portions of each airline’s corporate history over the past 10 years, which has included multiple other unsuccessful merger attempts. Next, Part III describes the circumstances surrounding the failed combination of Olympic and Aegean, including the role the Greek financial crisis played in their desire to merge. Part IV compares the United/Continental and Olympic/Aegean mergers, first discussing the legal standards the United States government and European Commission ("EC") employed in making their antitrust determinations, and then explaining key differences between the two unions - such as distinctions between the size and concentration of the U.S. and Greek/European airline markets, and Olympic/Aegean unwillingness to make compromises in light of the EC's initial findings - that might explain the opposite outcomes. This section also proposes that Olympic Air and Aegean Airlines could aid their future chances of success, should either decide to attempt to merge with the other or another airline, by working more collaboratively with the EC to achieve compromises and reasonable alternatives. Finally, Part V concludes by suggesting that more airline mergers are likely to follow in the United States and abroad.