An analysis of the tourism and wider economic impacts of price-reducing reforms in air transport services in Egypt

The Egyptian air transport industry is subject to a range of restrictions and charges, which combine to reduce the country's air connectivity and competitiveness. This paper assesses the links between air transport policies and tourism and wider economic benefits. It first provides estimates of the distortions that the present and relatively closed air space in Egypt impose on the price of air transport. It then examines the effects of removing these distortions by simulating the direct and indirect impacts of price-reducing reforms in air transport services. The results indicate that while the direct impacts of the reforms are negative for some agents, the economy-wide benefits outweigh the costs incurred by the reforming sector. It is argued that Egypt would benefit from pursuing the reform of the air transport industry.