A Critical Assessment of The Public Service Obligations (PSO) in European Air Routes

Abstract

The deregulation of air transport created the need to safeguard an acceptable level of air connectivity between urban centres and remote European regions. To this end, several protection schemes have been developed around the world, including the imposition of Public Service Obligations (PSOs) in a few European air routes. Thirty years after the establishment of PSOs in Europe, the debate over their efficiency and effectiveness is still active. This paper offers an overview of the European PSO program along with a review of the academic literature exploring the main issues that accompany the PSO scheme. The main findings that call for consideration from both scholars and policymakers are the need to strengthen the competition in these non-commercially attracting routes, the necessity for central network design and coordination and the requirement for transparency and open dissemination of information regarding the PSO routes.