Optimal Air Service Agreements Academic Article uri icon


  • Air Service Agreements are government-to-government negotiated bilateral agreements that determine a nation's permitted passenger carrying capacity between origin and endpoint nodes on particular international air routes. This study determines how social surplus-maximising agreements can be constructed under various demand and bargaining assumptions. The analysis is exposited in terms of the Australia-Japan air route although it is quite general. The role of marketing and downstream inter-industry effects are examined. Problems of computing optimal agreements are discussed.

publication date

  • September 1998