Title: Liberalization and Regional Integration of Air Transport in South Asia:  A Legal Evaluation
Name: Anusha Wickramasinghe
Organisation: International Institute of Air and Space Law, University of Leiden
Supervisor: Prof. Pablo Mendes de Leon
Email address: anushawickramasinghe(at)yahoo.com
Expected date of completion: 31 December 2015

Abstract of thesis: Asian aviation is in transition. According to Centre for Aviation, Asia is being absorbed into the liberal web air transport regulation but slowly. However, South Asian civil air transport still remains largely regulated. Though civil aviation policies in South Asian states endorse liberalization as a prospect but have failed to materialize in practice. This absence of dynamism in legal and policy fronts is hurting development of air transport regulation and importantly keeping regulations in par with the global trends. The preamble of the Chicago Convention 1944 ensures equality of opportunity in air transport and to ensure equality the states should be ready with necessary updating of regulatory directives promoted by the International Civil Aviation Organization (ICAO). Obviously state to state air services regulations have been exclusively granted to states by the Chicago Convention itself and ICAO has technically no mandate on economic regulation of air transport. Again it is up to the states to be prepared with the required legislative and policy updates.

South Asia has shown no clear signals, apart from few open skies agreements, on liberalization of the industry up to date. Moreover, South Asia presents a dim prospect for regional cooperation of air transport so far. It is presented that there is an urgent need to identify the legal and policy impediments which stall the liberalization and regionalism of air transport in South Asia. To this end, in this study focuses on the current global legal and regulatory framework for liberalization and deregulation, regional integration and air transport, and South Asia’s prospects for liberalization of air transport.

Name: Eric Tchouamou Njoya
Organization: University of Huddersfield / Karlsruhe Institute of Technology
Supervisor: Prof. Dr. Hans-Martin Niemeier
Email address: e.njoya(at)hud.ac.uk private email: e_njoya(at)gmx.de
Expected date of completion: November 2015

Abstract of thesis:

The development challenge in Kenya is how to increase growth and eliminate poverty. Almost half of the country’s 44.35 (2014 estimated) million people are poor. The country faces trade-offs in deciding which sectors to invest on, how to boost domestic and foreign investment, how far to liberalise trade and services, and how to ensure that growth helps achieve the millennium development goals. Tourism and aviation are two important sectors of the Kenyan economy. As the third highest contributor to gross domestic product, Kenya‘s tourism is being promoted by the government as a source of economic growth and poverty alleviation. It is also a cornerstone of the country‘s new development blueprint covering the period 2008 to 2030. The government of Kenya reports that the tourism sector through its direct and multiplier effects contributed 10 per cent of the GDP in 2014 and employed 9 per cent of the total workforce. Given its structure (that is, mix of small and large businesses that draw upon domestic, regional and international markets) and components (especially natural and manmade attractions), tourism is complex, cross sectoral and highly dynamic. But it not predetermined to be positive for the economy as a whole.

Air access is crucial for Kenya’s tourism industry. Given the geographical position of the region, the under-development of surface transport connection of the region with the rest of Africa, air transport in Kenya needs to be developed further, to facilitate its economic integration and growth. In recent years more attention has been given to the impacts of aviation regimes on tourism. It has been argued that further liberalisation of air services in developing countries is likely to lead to substantial growth in tourism traffic and receipt. Tourism expansion will reduce poverty by generating additional employment for the poor or increasing tax collection. However, no previous study has focused on investigating the relationship between air transport and tourism growth or quantifying tourism in Kenya at a highly disaggregated level. It is also important to point out that forward and backward linkages between the Kenyan tourism industry and the local economy are under researched and several articles allude to welfare effects of tourism but rarely do they give rigorous proof of these allegations.

This study uses a dynamic micro-simulation computable general equilibrium (CGE) model to explore the link between tourism expansion and income distribution among household groups and poverty reduction in Kenya. The methodology is designed to understand the full impact of changes in tourism spending on the whole economy. The CGE model comprises nineteen sectors, twenty household groups and five factors of production, making it particularly appropriate for welfare analyses. The construction of the micro household module relies on datasets from the Kenya Integrated Household Budget Survey (KIHBS) 2005/06. The KIHBS is based on a representative sample of 13,430 households.

Results show that one key factor within the control of the Kenyan government that can significantly influence air traffic flows, costs and competitiveness is the decision on relaxation of restrictions of air services. Results further indicate that other things being equal, open skies policy is likely to play a prominent role in strengthening the interdependence between air transport and tourism development in Kenya.

Additional tourism is found to be positive for the Kenyan economy. Tourism growth and the resulting slight economic growth principally trickle down to the poor, though increases in labour demand and in income. Overall, tourism expansion benefits urban households at the lowest expenditure decile more as compared to rural lower income households. The drivers of labour demand are industries mainly classed as urban (construction, hotel & restaurant, etc). The increasing returns to labour in these industries raises the incomes of urban workers and (ceteris paribus) hurts workers with the same skills in rural areas, since they see higher consumer prices but no benefits from labour demand growth. Increased incomes allow consumers to enjoy a high level of aggregate real consumption. Results further indicate that tourism expansion leads to a slight redistribution of income between rural and urban region. This implies that tourism expansion is likely to contribute to the reduction of income disparities across region.

Foster-Greer-Thorbecke poverty indices decline in the wake of the positive tourism shock, suggesting that tourism has the potential to reduce poverty, with the the largest decline observed in urban areas.