Defining Performance of the Air Transport System. Chair in Management of Network Industries – Mir Cdm Working Papers Series

Liberalization is generally credited with efficiency gains and growing economic performance. However, in the network industries such a vision is generally too simplistic, as economic performance is only one of the performance criteria – there is also technical and social performance (e.g., safety) – and as there probably economic performance tradeoffs between the different actors of the broad system (e.g., air transport system). Furthermore, the liberalization of the network industries is generally accompanied by an institutional process of re-regulation, whereby institutional arrangements are created so as to guarantee and balance the various performance objectives and actors' interests. So far, it has been difficult to evaluate the effects of a given regulatory institutional system on the performance of a liberalized industry as a whole. This paper will take the case of a national air transport system (including airlines, airports, and air traffic control), namely the case of Switzerland. It will first identify the main relevant and systemic economic, technical, and social performance criteria in the air transport industry. It will then describe the current institutional regulatory framework for the case of Switzerland. Finally, it will establish, for the case of Switzerland, a relationship between this institutional regulatory framework and the industry's performance. This paper, a case study of exploratory nature, is grounded in an already existing theoretical framework which links institutions to network industry performance. In its conclusion, it will try to generalize, from the case study of Switzerland, to other countries and institutional levels (e.g., EU), as it will also try to develop, from this case, a more dynamic conceptual model of how regulatory institutions relate to performance in the air transport system.