The battle is still being fought over restrictions on ownership and control that are vital elements of a totally liberalised industry, despite it being generally agreed that open skies is the future.

So says the UK's Civil Aviation Authority (CAA), which points out in a discussion paper Ownership and control liberalisation the lack of commercial freedom in international aviation compared with other comparable global industries such as financial services and even utilities and defence, and asks: "Why should airlines be so special when it comes to ownership and control?"

The CAA believes there are likely to be substantial benefits from liberalisation and sets out a pathway for reform, which, it says, "should lead to safer, more efficient and cheaper international aviation". It believes liberalisation of ownership and control would bring benefits for safety and also for all participants in the industry - airlines, their staff and their passengers.

Greater market opportunities would also act as incentives for countries' safety authorities and their airlines to improve safety performance, the CAA believes, while reform would facilitate cross-border investment, lower financing costs and attract innovative management.

For consumers, lower prices and greater choice should result, while multinational airlines could offer new routes that are not possible at the moment. Airline staff have not been left out - the CAA believes they should have nothing to fear from reform. "A more flexible and responsive sector enabled by liberalisation should increase demand for the industry's outputs, with positive effects on employment," it insists.

Meanwhile, a separate CAA study has concluded the explosive growth of the no-frills carriers has had less effect on passenger traffic growth rates than has been widely perceived.

Much of the growth has resulted from low-cost carriers gaining traffic from other sectors - notably charter airlines but also from legacy carriers. "We think it suggests there is a lot more substitution than stimulation," says Alex Plant, CAA head of economic policy and international aviation.

"Why should airlines be so special when it comes to ownership and control?"

UK Civil Aviation Authority

Source: Airline Business