Introduction

Abstract

The European Union (EU) has brought about a revolution in air transport.¹ Before the creation of the single market in air services, European aviation was characterized by protectionism, collusion and fragmentation (see Button and Swann 1989, 1991; Doganis 1985, 1991a; Holmes and McGowan 1997; Kassim 1995, 1996a, b; OECD 1988). Governed by a patchwork of state regulations under an international regime that enshrined the absolute sovereignty of states, the industry was segmented into distinct national markets. Governments used their authority to promote the interests of state-owned ‘national champions of the air’ (Kassim 1995). They erected regulatory barriers at home and used the terms of bilateral air services agreements — the global mechanism for the exchange of commercial aviation freedoms — to protect their chosen carriers on routes to short-haul European destinations and on long-haul intercontinental services. Although there was some variation in the outlook and approach adopted by European governments, competition in the few places it existed was strictly limited and the opportunities permitted to independent carriers were scarce.