Economic Benefits of Market Liberalization. Evidence from Air Transport in Poland

Abstract

This paper focuses on economic effects that are a consequence of air transport liberalization in Poland after accession to European Union. Scenario analysis was built to estimate the impact of changes on the international aviation market, including passenger traffic, airport revenues and employment. The analysis is estimated on and applied to Polish market in the time period before and after market deregulation in 2004. Enabling airlines to open new routes and to offer services at lower prices results in vigorous development of number of flights. The passenger traffic at Polish airports in 2009 was of 18,9 million which means more than a double increase when compared to 2003 (7,1 million). Increased number of flights affects local economy. Removing restriction on access to air transport market has created additional PLN 0,96 billion (or EUR 0,24 billion) of main airports sales revenue in Poland over 2004-2008 time period. The passenger traffic has created more than 19 thousand jobs located on-site and off-site at main Poland’s airports in 2008. One can assume that if not for the market policy change and the air traffic vigorous development, the total direct employment number in 2008 would be twice as small. Submitted: May, 2010 1st revision: May, 2010 Accepted: July, 2010