The principles and policies of regulating airline competition
Regulation in its generic sense has existed for a very long time in different forms, with different aims and different problems of accountability, but the study of competition regulation by a Government agency has perhaps become fashionable only in recent years. This thesis consists of two leading themes. First, it will contend that, whilst the market system has been seriously underestimated as a social institution to the extent that it should be left to operate and organise itself where that is possible, it is at the same time not always self-regulating. Residual intervention by the State or its agencies will remain necessary in strategic cases, either to protect individual autonomy and choice, or to correct failures of the market system. The question is simply more or less regulation. Secondly, and on that premise, competition regulation must be distinguished into economic regulation and antitrust regulation because the relationship between them is inversely proportional: the more intense economic regulation is, the less important antitrust regulation becomes. By implication then, economic liberalisation or deregulation must be accompanied by a robust framework of antitrust regulation to ensure that the conditions of sustainable competition are not threatened by anti-competitive practices. Conditions of sustainable competition are thus critical for market contestability. For many years, domestic and international airline competition has been the subject of comprehensive regulation. With the passage of time, however, the thinking has changed and, no doubt, liberal policies and practices will continue to find expression in future political and economic sentiments. The responsibility for regulating airlines in the United Kingdom falls on the Civil Aviation Authority, which has played a formidable role in transforming the policy of heavy regulation into minimal regulation, although much of that regulatory landscape has now been altered with the advent of the Single European Aviation Market. The experiences of, both, the CAA and the new SEATNI provide an illuminating account of the evolutionary process of regulating airline competition, that from economic to antitrust regulation.