The challenge of liberalising domestic airline competition in a less developed country

A new wave of liberalisation of domestic airline competition is taking place in less developed nations, although the initial motivation in most cases is to supplement the capacity of the government's own airline. Liberalisation tends to begin with free market entry and a strong interest in privatisation while other regulatory controls are maintained. This position is untenable and policy makers in the less developed countries are having to learn quickly without the benefit of the detailed analyses that preceded liberalisation in the developed countries. This paper explores these problems and focuses on the lessons that policy makers in the less developed countries can draw from experiences elsewhere.