The economics and regulation of commercial air transport with particular reference to Manitoba and "third level" carriers

Abstract

The study examines the economics and regulation of commercial air transport, with particular reference to those Manitoba-based air carriers generally regarded as 'third level', and with the basic objective of considering appropriate public policy in the regulation of such carriers. At present, no universally recognized definition of 'third level' commercial air transport exists. Concomitantly, there has been no statement of public policy regarding the regulation of this sector. Hence, the setting of some terms of reference, in defining the norms of public policy, in considering the economic implications of alternative approaches, and in defining the industry, is the task of this analysis. In brief, it is only in examining the interaction of institutional, environmental, and operational variables that the devising of regulatory policy may be pursued. The immediate need for a proper weighting of the objectives of public policy is evident. The study places emphasis on developing concepts of: 1. productive efficiency in a static sense 2. dynamic efficiency 3. optimum allocative efficiency 4. the proper role of competition 5. service integration 6. stability of firm operation. In conclusion, the public policy recommendations offered imply a consideration of all these norms; yet, in the final development of policy, the role of normative judgment cannot be ignored. The thesis draws from this broad consideration of the theoretical implications of different regulatory approaches as well as from a consideration of actual Manitoba air transport experience, and a contrast of 'third level' and 'regional' air carrier situations...