Economic Impact Analysis of Deregulation and Airport Capacity Expansion in Japanese Domestic Aviation Market

As the market expands, regulation to foster orderly growth of the industry begins to become fetters for further growth. In the 1980’s, mission was initiated in Japan to deregulate economic regulations of the domestic aviation market. In line with deregulation policy, airport capacity expansion was accelerated to facilitated growth of the market. In this paper, social welfare of deregulation and airport capacity expansion of Tokyo International Airport (Haneda) is analyzed using both partial and general equilibrium approach. An important implication from this analysis is that deregulation and airport capacity expansion both play significant roles in realizing full benefit of aviation market growth. Large potential of the spill over effect of aviation policy should also be noted.