The last decades have witnessed a global trend toward airline deregulation, with significant impacts on national provisions for air service to smaller communities. One of the consequences of liberalization is that the carriers are no longer constrained to serve routes, and may thus neglect service to less profitable destinations with lower density traffic. Deregulation can therefore have detrimental effects on small remote centers.
The working hypothesis is that the analysis of multiple worldwide experiments with air service of small remoter communities will allow the identification of best practices. The main argument is that the policy design that works better in each case can be acknowledged, and thus provide a good starting point for further policy formulation and recommendations.
The exploration of the world best practices in policy design is developed from the evaluation of mature experiences of the U.S.A. Canada and the Northern Territories, and the assessment of progress toward deregulation in countries like Portugal, Spain and Brazil, according to two criteria: effectiveness and efficiency.
The study provided recommendations for the design of air transportation policies for countries where deregulation and the provision of small communities are under discussion.
A central conclusion of this project is that effective policy design and implementation requires attending to both infrastructure requirements and air service. Policy programs should include assistance to small airports to fund both capital investments and expenses for maintenance and operations. Centralized support is recommended where local communities lack the resources. The damaging effects on efficiency of cross-subsidies under monopolistic infrastructure management are also clear.
Policy performance appears to improve with the promotion of competition between carriers, and the implementation of tendering processes seems to help. The results suggest that supporting established major carriers creates inefficiency and that the rigor and structure of market regulation have particular impact on competition. Moreover, the creation of competitive markets is important not only for the removal of bureaucratic barriers, but also for transparency of subsidies. Independence of the regulatory authorities is also required.
Essentially, main findings suggest that targeting communities that are de facto isolated and have specific travel needs (medical, education, etc.) results in efficiency gains and is an effective way of achieving equity and social assistance. Subsidies to all passengers, on the other hand, prove to be a wasteful use of resources. An assessment of the distribution of benefits is recommended to evaluate the effectiveness and need.