The Impact of International Air Transport Liberalisation: The Case of Nigeria

The impact of air transport liberalisation suggested by economic theory and globalisation inspired Nigeria to adopt a more liberal policy towards its international Air Service Agreements (ASA). The policy involves implementing the Yamoussoukro Declaration with some African countries, an Open Skies Agreement with the US, and the easing of some market access regulations with several other countries. This study explores the extent to which international air transport liberalisation has impacted the Nigerian air transport market over the ten years (2001-10) since its commencement. The objectives of the study include, among others: to review the country’s ASAs and determine the level of liberalisation in those agreements, to study the performance of the ASA in terms of international air traffic demand in the market, to determine the impacts of liberalisation on passenger welfare in the market, and to evaluate the impact of further liberalising market access and carrier ownership.

The study employed the use of secondary data relating to traffic volumes and socio-economic variables from the market. These were subjected to analytical methods commonly used in the study of liberalisation, including descriptive statistics, entropy and econometric modelling in order to establish relationships among the variables. Also, primary data were collected from a field survey and analysed to complement some of the findings.

The empirical findings were able to fulfil the objectives of the study. It was discovered that most countries’ ASAs were not fully liberalised, but have some level of liberalisation. For a country to attain market access liberalisation, the ASA should grant fifth freedom rights, free pricing, multiple designations, and free determination of capacity and frequency. Another salient discovery was that liberalisation of market access and carrier ownership could spur traffic demand in all route markets, which could substantially increase total annual international traffic flows. The impact on traffic could trigger changes in air fares that would enhance consumer welfare. Nigeria’s airport infrastructure is found to be capable of accommodating the expected traffic increases as a result of the liberalisation.

Although there were some adverse effects from the policy which include capital flight and the possible liquidation of home carriers, the thesis concludes that liberalisation could stimulate traffic demand in the market significantly, which could enhance revenue to the industry for sustainable development. The study concludes with recommendations and areas of further research.