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David Gillen and William G. Morrison

In this chapter we catalogue the evolution of air policy and airline competition in Canada’s domestic, international and transborder markets. We examine how Canada’s air transport sector transitioned from being highly regulated, government-controlled and subject to public utility style regulations to one of ‘differentiated’ liberalization. Yet despite deregulation, privatization and ‘open skies’ agreements, the status quo of dominance by a small number of airlines in Canada remains. While air service agreements have led to market growth in some dimensions the evidence is that airline market power has not been eroded. In particular Air Canada, once a government-created monopoly, continues to dominate as part of the Star Alliance. We discuss what a new air policy might look like for Canada and the balance between consumer welfare and wider economic benefits to aviation-dependent sectors versus policy that seems focused on the economic well-being of a small number of private airlines.

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David Gillen and William G. Morrison

This chapter investigates economic aspects of aviation security, which we argue defines a fundamental economic problem, that of resource allocation. We review the recent history of attacks on civil aviation and the institutions that comprise global governance of aviation security. We outline economic approaches to defining and measuring output, cost efficiency and productivity and we compare the costs and the financing of aviation security across international jurisdictions. We consider the economic arguments underlying the question of who should pay for aviation security and we discuss the necessity for significant changes to the future implementation of aviation security in the decades to come.