Theory, Policy And Emprical Analysis On Trade In International Air Transport Service

Due to the contemporary globalization which required the production, circulation and consumption were worldwide, the movements of goods and persons came to a peak which was never reached before, and the importance of international air transport service was increasing in the process of globalization. The traditional bilateral international air service regime shaped after World War II also experienced great changes, i.e. the liberalization under the bilateral regime and the regional trade blocs became popular and WTO started to be involved in regulation of the air transport service. However there lacked the theoretical analyses of international air transport service. Therefore a theoretical frame to explain the international air transport service trade was badly needed to perfect the air transport economics and to provide theoretical base for the policy decision in trade in international air transport service.Based on the current literature of international trade in services and air transport economics, in this dissertation a frame to analysis the theory, policy and policy instruments of international air transport service trade was constituted. And a CGE model was utilized to simulate the results of policy changes in international air transport in order to confirm the conclusions of the theory model and the policy analyses. In this context, the dissertation discussed some suggestions for China's international air transport policies.In the part of theory for international air transport service, first, the author incorporated the theories of Deardorff (1985,2001), Francois and Ian Wooton (2000), Burgess (1995), Hoekman and Matto (2008), Baumol, Panzar and Willig, et al (1981, 1982), Caves and Tretheway (1984), Gillen, Oum and Tretheway (1985) into the newly-built Cournot model of international air transport service in which international air transport was treated as a trade service. The equilibriums for various circumstances were analyzed, from which the conclusions were drawn that the total social welfare would raise, the conditions of consumers and producers would be improved, it was uncertain whether the international air transport sector would lose or gain and the factor income in this sector would suffer, while fewer restrictions were laid on international air transport.Then the author probed into the impacts of changes of the supply of and demand for the export goods as well as the implementation of restrictions on the export goods which international air transport served. The raise of the supply of the export goods would enhance the gains of international air transport sector and the social welfare as well as the surplus of producers of the export goods and consumers; the fall of the demand for the export goods and the restrictions on the export goods would reduce the social welfare, the surpluses of the producers of export goods and the airlines. When the demand for the export goods went down, the change direction of the surplus of consumers was not certain. But after the restrictions were laid on the export goods, the surplus of consumers would fall. In three cases, the income of specific factor in the export sector would decline. In case of the supply increase of the export goods the income of specific factor in international air transport sector fell while it rose in the other two cases. The incomes of mobile factors in both sectors were dropped when the supply of the export goods increased, and when the demand for the export goods decreased, it was uncertain whether the income of mobile factor in export sector would fall or rise and that in international air transport sector increased. And in case of the implementation of restrictions on the export goods, the income of the mobile factor in international air transport sector would go up and it was not sure whether that of the export sector would go up or go down.In the part of policy analyses, first, the development of both the regimes of trade policy in international air transport service and the liberalization of international air transport was discussed. After a thorough investigation into the international bilateral air service regime, the regional air transport bloc, the air transport service in WTO, Open Skies and the conflicts between the traditional bilateral air service regime and the regional air transport bloc, a conclusion reached that the traditional bilateral air transport regime was still dominant, the regional integration in air transport developed rapidly and the multilateral regime in WTO started to push the liberalization of trade in international air transport service forward. Open Skies which originated from the bilateral regime achieved a great progress in the geographic scope and the contents, and the regional trade blocs also adopted the approach of Open Skies. Furthermore the Community Approach of European Union challenged the traditional bilateral air service regime.Secondly, the main instruments of trade policy in international air transport, of which routes, capacity, tariff, withholding and airlines designation, were analyzed with tools of economics. The analyses revealed that those instruments, which restricted international air transport sector, would benefit this sector at the cost of social welfare losses, and distort the consumption and production as well. In order to lay a foundation for the policy empirical simulation, the restriction measures in airport and ground handling sectors were investigated, which were in the focus of air transport negotiation in Doha Round.Thirdly, the trade policies in international air transport service were analyzed in the view of political economics. The pros and cons for liberalization of international air transport service were examined in detail.In the part of empirical simulation, the possible expansion of GATS (General Agreement on Trade in Services) Annex on Air Transport Service was used as the target of policy change simulation to test if the theory and policy analyses were in agreement with the real world. The simulation results of A and B schemes showed that the liberalization of international air transport which was treated as a trade service might promote the import and export of a country or a region, improve the social welfare and trigger the adjustment of income distribution. As the liberalization of air transport induced more exports and imports, especially those in manufacture sectors, the overall income level would raise while the income of labors in international air transport sector would decease, which accorded with the results of theory model. The results also disclosed that the output of air transport sector in all countries and regions decreased, which was just in agreement with the conclusion of the theory model, as the output of air transport sector in term of currency would fall due to the reduction of transport prices. The more competition in air transport sector increased the social welfare and the exports and imports in other sectors. However from a scenario, the more gains the macro economy obtained, and the more losses the air transport sector suffered. This verified that the interest group would object the liberalization of international air transport because of the losses they would suffer from the liberalization.In the end, based on the theory, policy and empirical simulation, the author suggested that the primary goal of international air transport policy for China should satisfy the need of the economic and social development, and liberalize international air transport with different approaches in different regions under different regimes. As per the results of the empirical simulation, the alternative scenarios for China in the context of the expansion of coverage of GATS Annex on Air Transport Service were chosen in the principle of the combination of nation's interest and the sector's interest.