The liberalization of air services: prospects and challenges for the Indian economy

Abstract

Purpose – The purpose of this paper is to examine, with a specific reference to the Indian economy, the interface between the World Trade Organization (WTO)/General Agreement on Trade in Services (GATS) disciplines and aviation services; the challenges to the incorporation of air services regimes into the world trade treaty; and the alternative routes for the liberalization of air services markets. Design/methodology/approach – The paper adopts the doctrinal approach to legal research in analyzing literature on the integration of air services into the multi-lateral trading system. The paper takes a critical look at the current state of the aviation industry, the rationales and routes for liberalization, as well as the challenges facing it. Findings – The paper reveals the state of the Indian aviation market and its preparedness for integration into the global market system. The merit of a gradual approach is examined. Research limitations/implications – The WTO framework offers the traditional route for the liberalization of trade. However, since the inception of air travel, air traffic rights have been traded between countries on a bilateral basis, involving concepts of sovereignty over national airspace. The paper offers some ideas on how the two can be integrated. Originality/value – The research draws on recent events in the Indian aviation sector. It is of importance, especially to other emerging economies with similar social-economic indicators. It objectively questions the rationales for liberalization or globalization and its merits.