ewal plans. Although global airlines reported an average 5 percent growth rate in 1999, in reality they had negative performance levels and operating losses.
From a microeconomic perspective, the period since the late 1980s can appropriately be characterized as "the Age of Regulatory Reform." In the United States and Europe, any number of critical industries are being deregulated as governments move to foster enhanced competition, garner economic advantages, and generally reduce their involvement in certain private sector functions (Button and Johnson, 1998). Recently, the United Kingdom took steps toward deregulation of its air transport market. The issue at hand concerns existing market regulations and is influenced by a 22-year-old air service agreement between the United Kingdom (UK) and the United States (US) which prohibits carriers from picking up traffic in the form of cargo or passengers in the UK and carrying it into a third country if the shipment originated in the US. The so-called "fifth freedom rights" of this regulation are now being eliminated in order to allow companies like Federal Express to enjoy expanded capacities in the UK market. Also at issue are bilateral negotiations on air liberalization between the two countries, as well as other treaty and official agreements between other countries that have international carriers in place (U.K opens door..., 1999).
The UK also faces the need for certain kinds of deregulation because of its relationship to the European Union. According to Button and Johnson (1998), regulatory change in the UK is being driven by the development of a common aviation policy in the European Union (EU). From the mid-1980s, there were moves to liberalize bilateral agreements between some EU members. Agreements on such issues as market entry and tariffs were commonplace. The Economist (Freedom of the pond..., 1992) has noted at the beginning of the present decade that gover...