INEFFICIENCIES CAUSED BY GOVERNMENTS’ INTERVENTIONS IN AIRLINES’ MARKETS

Abstract

At least seven of the indicators of market inefficiencies and/or failure are visible in the airline industry. These have been triggered by national, multi-national or supranational governments’ (NMSGs’) interventions trying to resolve political, social or environmental problems. These seven interventions (many lacking preliminary economic analysis) have been aimed at resolving lack of competition, filling missing markets, and neutralising the presence of negative externalities, free riders, social inequalities and moral panic. Desk research showed that just one of these NMSGs’ interventions was beneficial since it encouraged competition while the other six unintentionally triggered market inefficiencies or failures. Furthermore, it is possible that some of the interventions could eventually make advanced world airlines subsidise their advancing world competitors.