Understanding the impact of liberalisation in the EU-Africa aviation market

Abstract

The aim of this paper is to discuss the impact of recent regulatory changes in air passenger transport between Europe and Africa. We quantify the impacts of liberalisation of the EU-Africa aviation market on air fare and service frequency using a two-stage least squares model approach. The analysis shows that inter-continental air services between Europe and Africa are mainly governed by bilateral agreements negotiated between the individual countries of the EU and the various African governments. Compared to the developments in the links between Africa and the rest of the world, the EU-Africa market appears to be losing momentum. The results of the econometric model suggest that EU-Africa routes which experienced liberalisation over the period 2002 and 2016 had 28% higher departure frequency and 14% lower fares than those routes without such a regime change. Furthermore, the results show that the presence of a low-cost carrier reduces fare by 31%.