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A structure conduct performance assessment of alternative Canada-United States Air Services Agreements

University of British Columbia

Canada and the United States have the largest, bilateral trade relationship of any two nations. Fittingly, they also exchange the largest volume of international air travellers of any pair of countries. The terms under which Canada-United States air transportation are provided are set forth in the Canada-United States Bilateral Air Services Agreement. The current Agreement was founded upon the consumer demands and industry operating practices that prevailed in 1966. Although the Agreement was substantially modified in 1974, the essence of the regime has been rendered obsolete by the developments of transborder airline market characteristics. Canada and the United States have recognised that a new bilateral air services agreement is a necessity. Three general strategies have been proposed as the bases for a new regime: the specified rights option, the open border option, and the cabotage rights option. Specified rights is the genre of the current regime: all routes having entry strictly controlled. The open border option would entail complete freedom for either country’s carriers to contest all transborder routes. Cabotage rights allow carriers to contest any market within or between the two countries. A new agreement has yet to be achieved. The delay in finding an acceptable scheme has been the difficulty in meeting both major objectives for the new policy: efficiency and equity. This report examines the alternative schemes for a new Canada-United States air services regime. The structure-conduct-performance paradigm of industrial analysis is utilised to evaluate the nature of the distribution of benefits that would arise following the adoption of the various alternatives. The report concludes that the adoption of a phased-in, open border regime would best meet the twin objectives of efficiency enhancement and equity of opportunity.

Canada; United States

Text

eng

Vancouver : University of British Columbia Library

10.14288/1.0087527

Master of Science in Business - MScB

Business, Sauder School of

1994-05

Graduate