The Air Transportation Policy of Small States: Meeting the Challenges of Globalization

The air transport policies of small states are currently at a crossroad. Policy makers in these countries are facing a difficult dilemma: either follow the general trend of liberalization and pay the high cost of the resulting restructuring or maintain the existing regulatory and ownership structures at the risk of isolation thus undermining the viability and sustainability of their air transport sector and their economies in general. This paper proposes to explore the broad issues raised by this difficult dilemma, to outline its special significance in the context of small states and to delineate the options opened to the economic policymakers; in these states. After a brief note on the method of research, we sketch the main elements of the international air transport industry in which the airlines of small states are called upon to act. We then propose to review the main features of the analytical framework of this debate as it pertains to the special circumstances of these states. Then we focus on the challenges facing the airlines of Small States, while the next section proposes a number of the alternative policy options open to the policy makers in these states. The main conclusions are drawn in the final section.