The traditional bilateral air service agreements do have some restrictions that prevent foreign airlines to invest in foreign hubs, however, with the open skies agreements such restrictions do not exist and an airline will be able to fully exploit its investments in a foreign country thereby facilitating service between preferred cargo airports. The provision of such agreements also promote cargo services by guaranteeing access to customs facilities and processing, offering a range of ground-handling options, and availing surface transportation necessary for flights. Such provisions enable cargo carriers to efficiently monitor and control cargo from their point of departure to their final destination. This will enhance faster and safer delivery of cargo translating into value-added service to customers.
The benefits derived from the development in the international air transport is not limited to air services industry alone but spreads to cover several service providers, labor market, manufacturers, and the general economy of a state or country (InterVISTAS-ga, 2006). These benefits are felt through multiplier effect with the benefits starting from the communities in the proximity of the airports spreading further into other regions. Business and leisure travels will require services offered by other industries such as the hotel industry and tourism industry. Such demands have the ability of leading to the emergence of new industries in a region and give an area the opportunity of competing economically on a global scale.
Conclusion
Generally...
The benefits of such agreements are felt across all industries that depend on international air transport. The agreements also form the foundation for future closer integration of airlines and investment; also airlines find a way of expanding their routes both regionally and globally. Expansion of the air transport industry leads to higher competition between the airlines which motivate airlines to come up with better and unique strategies. The overall impact of this is development in the global economy due to a wider commercial air transport market.
References
Alford, E. And Champley, R. (2007). The impact of the 2007 U.S.-EU open skies air transport agreement. ITA Occasional Paper no. 07-001
Brueckner, J. And W.T. Whalen, (2000). "The Price Effects of International Airline Alliances,"
The Journal of Law and Economics: 43(2), 503-545
Hertel, T.W. (1997) Global Trade Analysis: Modeling and Applications. Cambridge University Press: New York
InterVISTAS-ga, (2006). The economic impact of air service liberalization, accessed on March
15, 2011 from http://www.intervistas.com/4/reports/2006-06-07_EconomicImpactOfAirServiceLiberalization_FinalReport.pdf
Kasarda, J.D. And J.D. Green, (2005). "Air cargo as an economic development engine: A note on opportunities and constraints." Journal of Air Transport Management 11: 459-462.
