Publication: Toward a Competitive Air Transport Market in Africa: The Role of Bilateral Air Service Agreements Liberalization
Loading...
Date
2022-10
ISSN
Published
2022-10
Author(s)
Editor(s)
Abstract
This study examines the impact of bilateral air service agreements on air passenger transport in Africa and quantifies the consumer welfare effects associated with air transport liberalization. Using an unbalanced panel of 71 country pairs from Africa observed over 2011–19, the paper estimates the extent to which bilateral air service agreements liberalization affects the following: (1) passenger travel, (2) average airfares, (3) flight frequency, and (4) market competition within a country pair. The empirical analysis employs the difference-in-differences estimation method and pays close attention to the endogeneity concerns coming from the simultaneity and reverse causality surrounding the pricing, demand, and frequency decisions. The results indicate that both partial and full liberalization of bilateral air service agreements lead to a reduction in airfares and an increase in air travel demand and flight frequency, respectively. The analysis finds no evidence that market competition, as measured by the number of operating airlines, increases following liberalization. After quantifying all the channels through which the policy environment can affect air transport markets in Africa, the findings show that aviation liberalization generates consumer benefits that are equivalent to a 40–42 percent drop in airfares, that is, the price equivalent effect of air liberalization.
Link to Data Set
Citation
“Cristea, Anca; Abate, Megersa; Benitz, Daniel A.. 2022. Toward a Competitive Air Transport Market in Africa: The Role of Bilateral Air Service Agreements Liberalization. Policy Research Working Papers;10204. © World Bank. http://hdl.handle.net/10986/38154 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Geopolitics and the World Trading System(Washington, DC: World Bank, 2024-12-23)Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication From Patriarchy to Policy(Washington, DC: World Bank, 2025-05-29)Legal institutions play an important role in shaping gender equality in economic domains, from inheritance to labor markets. But where do gender equal laws come from? Using cross-country data on social norms and legal equality, this paper investigates the socio-cultural roots of gender inequity in the legal system and its implications for female labor force participation. To identify the impact of social norms, the analysis uses an empirical strategy that exploits pre-modern differences in ancestral patriarchal culture as an instrument for present-day gender norms. The findings show that ancestral patriarchal culture is a strong predictor of contemporary norms, and conservative social norms are associated with more gender inequality in the de jure legal framework, the de facto implementation of laws, and the labor market. The paper presents evidence for a political selection mechanism linking norms to laws: countries with more conservative norms elect political leaders who are more hostile to gender equality, who then pass less progressive legislation. The results highlight the cultural roots and political drivers of legalized gender inequality.Publication Global Socio-economic Resilience to Natural Disasters(Washington, DC: World Bank, 2025-05-22)Most disaster risk assessments use damages to physical assets as their central metric, often neglecting distributional impacts and the coping and recovery capacity of affected people. To address this shortcoming, the concepts of well-being losses and socio-economic resilience—the ability to experience asset losses without a decline in well-being—have been proposed. This paper uses microsimulations to produce a global estimate of well-being losses from, and socio-economic resilience to, natural disasters, covering 132 countries. On average, each $1 in disaster-related asset losses results in well-being losses equivalent to a $2 uniform national drop in consumption, with significant variation within and across countries. The poorest income quintile within each country incurs only 9% of national asset losses but accounts for 33% of well-being losses. Compared to high-income countries, low-income countries experience 67% greater well-being losses per dollar of asset losses and require 56% more time to recover. Socio-economic resilience is uncorrelated with exposure or vulnerability to natural hazards. However, a 10 percent increase in GDP per capita is associated with a 0.9 percentage point gain in resilience, but this benefit arises indirectly—such as through higher rate of formal employment, better financial inclusion, and broader social protection coverage—rather than from higher income itself. This paper assess ten policy options and finds that socio-economic and financial interventions (such as insurance and social protection) can effectively complement asset-focused measures (e.g., construction standards) and that interventions targeting low-income populations usually have higher returns in terms of avoided well-being losses per dollar invested.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Open Skies over the Middle East(World Bank, Washington, DC, 2014-06)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.Publication Open Skies over the Middle East(World Bank, Washington, DC, 2014-07)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 longer paper by the same title that this Quick Note is based on uses detailed data on worldwide passenger aviation to estimate the effect of air transport policy on international air traffic2. The policy variable is a quantitative measure of the commitments under international agreements. The paper analyzes, and 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.Publication Transport Policies for the Euro-Mediterranean Free-Trade Area : An Agenda for Multimodal Transport Reform in the Southern Mediterranean(Washington, DC: World Bank, 2002-08)This study argues that the 15 European Union (EU) countries and their 12 Mediterranean Partners should complement their Euro-Mediterranean free-trade area for industrial goods with a common transport space. This would require the removal of policy-induced frictions in the region's multi-modal transport system in order to facilitate the flow of foods, people, and investments within this emerging trade block. The purpose of this report is to identify the bottlenecks and inefficiencies that currently exist and to map out the reforms in the legal, regulatory, and institutional framework that should be implemented to address them. This includes both national and cross-border policy measures in the various modes (air, maritime, and land-based transport) as well as in transport logistics. The study compares sector performance and sector policies within the concerned countries and it benchmarks these against international best practice. It draws on policy lessons from other developing regions, such as Latin America and Eastern Europe and assesses the extent to which the policy framework of the EU Single Market in the transport sector could provide guidance for the creation of a common transport space throughout the Mediterranean region.Publication Is EU's Open Aviation Policy Good for Air Transport?(World Bank, Washington, DC, 2017-06)International air transport is at a crossroads. The aviation industry's center of gravity has moved toward the East, with main hubs in the Gulf region and ever-increasing passenger markets located in Asia. Long-haul inter-continental low-cost-carriers have emerged. Global alliances and their effects on competition have come into question. These outcomes have led to a reignited interest in the issue of liberalization in aviation: European regulators now need to balance concerns about fair competition with their own decades-long push for the multilateral liberalization of the aviation industry.Publication Mali : Transport Support to Sustainable Economic Growth(Washington, DC, 2004-06-25)This Economic and Sector Work (ESW) is consistent with the objectives laid out for the transport sector in the Poverty Reduction Strategy Paper (PRSP), and the Country Assistance Strategy (CAS), with its two primary objectives focused on strengthening existing reforms, and, helping define a forthcoming reform program. The proposed transport sector strategy relies on three pillars to: 1) promote sustainable development of transport infrastructure, ensuring adequate allocation of financial, and human resources to infrastructure maintenance; 2) increase transport sector efficiency, through sound market, and fiscal policies that support the rapid modernization of Mali's transport companies; and, 3) support cross sectoral initiatives, primarily in the areas of economic competitiveness, road safety, rural poverty alleviation, and in addition, to support HIV/AIDS prevention, and health services accessibility. Since transport costs represent a significant share of the imported costs of intermediary goods used in building up Mali's export capacity, their reduction should have a positive impact on Mali's economic competitiveness. Accordingly, the already completed privatization of the railway, the current attempt at privatizing the airport system, as well as the proposed measures to increase the productivity of Mali's truck transport, should all support economic competitiveness. The Government however, should foresee that adequate regulatory oversight is in place, to ensure that these productivity gains are passed on to transport customers. Regarding road safety in Mali, it is not only a financial dimension, but also a health dimension, since it tends to challenge an already stretched health service. This would entail training law enforcement agents, towards creating a nationwide road accident database. It is stressed that the development of a rural road maintenance, and construction strategy by no later than the end of 2004, be conducted, with part of this strategy's investment priorities defined, based on poverty reduction criteria, such as increased accessibility to health care, linkage to local markets, and other potential accessible services. The report emphasizes it is now an established fact, that transport activities are an important vector to HIV/AIDS dissemination, where activities within the transport sector, designed to educate transport operators about the disease, and its mode of transmission would, contribute to the overall fight against the spread of the epidemic.
Users also downloaded
Showing related downloaded files
Publication Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises(Washington, DC: World Bank Group, 2013-10-28)Eleventh in a series of annual reports comparing business regulation in 185 economies, Doing Business 2014 measures regulations affecting 11 areas of everyday business activity: Starting a business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting investors, Paying taxes, Trading across borders, Enforcing contracts, Closing a business, Employing workers. The report updates all indicators as of June 1, 2013, ranks economies on their overall “ease of doing business”, and analyzes reforms to business regulation – identifying which economies are strengthening their business environment the most. The Doing Business reports illustrate how reforms in business regulations are being used to analyze economic outcomes for domestic entrepreneurs and for the wider economy. Doing Business is a flagship product by the World Bank and IFC that garners worldwide attention on regulatory barriers to entrepreneurship. More than 60 economies use the Doing Business indicators to shape reform agendas and monitor improvements on the ground. In addition, the Doing Business data has generated over 870 articles in peer-reviewed academic journals since its inception.Publication Remarks to the Annual Meetings 2020 Development Committee(World Bank, Washington, DC, 2020-10-16)David Malpass, President of the World Bank Group, announced that the Board approved a fast track approach to emergency health support programs that now covers 111 countries. Most projects are well advanced, with average disbursement upward of 40 percent. The goal is to take broad, fast action early. The operational framework presented back in June has positioned the Bank to help countries address immediate health threats and social and economic impacts and maintain our focus on long-term development. The Bank is making good progress toward the 15-month target of 160 billion dollars in surge financing. Much of it is for the poorest countries and will take the form of grants or low-rate, long-maturity loans. IFC, through the Global Health Platform, will be providing financing to vaccine manufacturers to foster expanded production of COVID-19 vaccines in both part 1 and 2 countries, providing production is reserved for emerging markets. The Development Committee holds a unique place in the international architecture. It is the only global forum in which the Governments of developed countries and the Governments of developing countries, creditor countries and borrower countries, come together to discuss development and the ‘net transfer of resources to developing countries.’ The current International Financial Architecture system is skewed in favor of the rich and creditor countries. It is important that all voices are heard, so Malpass urged the Ministers of developing countries to use their voice and speak their minds today. Malpass urged consideration of how we can build a new approach to debt restructuring that allows for a fair relationship and balance between creditors and debtors. This will be critical in restoring growth in developing countries; and helping reverse the inequality.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.