Changing Course: Airlines in Europe

Abstract

AbstractExamining airlines allows for a detailed study of the effects of EU regulation and international regulatory competition on national institutions. Transnational technological and economic developments in airlines were subdued in the 1990s, but the US undertook sweeping reforms in the 1970s and 1980s that both offered an example of reform and altered direct competition in the world market, while EU regulation grew in the 1990s. The chapter argues that the two policy forms of internationalisation aided domestic institutional reforms, confirming the findings of the electricity case. It also underlines that overseas reforms operate through regulatory competition rather than mimetism. In particular, changes in American domestic institutions altered the competitive advantages of US airlines, creating pressures on institutions in Europe. However, when the American example clashed with domestic interests, it was not followed. Thus, the ideational power of overseas reforms is less important than fears of loss of competitive advantage. As in other sectors, Britain followed its own specific reform path.