Open Skies Treaty, Competition Policy and Regulatory Issues: An Exploratory Analysis in Marketing and Public Policy

Abstract

This paper discusses and analyzes the open skies treaty and its framework in the global airline industry. The work presents theory and seven relevant propositions and their impact on the proposed treaty as well as on consumers and competition policy areas in the European Union (EU) and the U.S. In the last six years, the EU and the U.S. have been negotiating an important treaty, called the open skies treaty, to streamline the transatlantic aviation market. The major interest in this treaty is attributed to the deregulatory environment, multi-carrier tie-ups, growing passenger traffic, and consumer demand in the transatlantic market. In the post-deregulatory environment, airlines have taken initiatives to form bilateral/multilateral strategic alliances and mergers. To stay competitive, these options have helped the carriers to stay competitive. Based on a literature review of marketing and public policy areas, the paper tries to explain those conditions and circumstances that may help establish this treaty. It is expected that in the coming years, the open skies treaty will bring opportunities as well as create problems for marketers, policy makers, and regulators. The significance of this work lies in its timeliness and relevance to the ongoing debate of highly beneficial yet controversial open skies between the U.S. and Europe.