Air transport liberalization strategy
Strategy& was retained by the civil aviation authority of a Middle East country to develop a liberalization strategy and devise a multiyear implementation plan. At the time of the engagement, the air transport market presented a number of distortions, and the government had some conflicting policy objectives. For instance, the government wanted to ensure that all citizens had access to air transport services, including those people living in areas that were not economical to serve; at the same time, however, the government did not want to pay subsidies or provide pricing freedom. The assignment’s challenges included finding ways to craft the strategy within the constraints and resolving the distortions that the market exhibited.
Strategy& based the air transport liberalization strategy on the specific economics of air transport in that country, as well as the broader aviation policies and sector objectives that the government was undertaking. The firm conducted a broad consultation process with key stakeholders (the flag carrier, other airlines, airports, investors, government representatives, tourism organizations) and developed a multiyear implementation program. Strategy& further assisted in the first stage of liberalization by supporting the client in the process leading to the issuance of licenses to new air carriers, hence opening up the domestic market to competition for the first time.
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