Efficiency and sustainability of public service obligations on scheduled air services between Almeria and Seville

Abstract

The objective of this paper is to examine how the imposition of Public Service Obligations (PSO) on certain routes may affect the transportation sector, with a focus on aviation in the European Single Market. Thus, this research investigates how this form of public intervention can be useful to access adequeate transport system in remote and peripherical regions. Subsequently, this paper intends to display that the imposition of PSO on aviation routes should be considered as a unique mean of market intervention on behalf of territorial cohesion. To accomplish this, an analysis of the economic impact in terms of efficiency and sustainability in the case of the scheduled air route between Almeria and Seville in addition to other transportation alternatives such the bus or train was conducted. Additionally, this research attempts to shift the research focus away from PSO routes in order to determine the convenience of administrative concession as a way to foster the creation of specific routes, which furthermore cannot be covered by the entrepreneurship of private initiative in a free market regime. Consequently, this approach recognises that this form of public intervention is a way of correcting particular market failures, such as the lack of the adequate transportation.