Competition Buzz: Competition Law in the Colombian Aeronautical Sector

By: Alfonso Miranda Londoño & Juan D. Gutiérrez-Rodríguez

Historically, the airline industry has been characterized by the heavy regulation established by the State. In effect, during the first six decades of the existence of these services in most of the developed countries, the governments applied a strict regulation in all the aspects of the service, a strong policy of subsidies and different entry barriers of legal origin that restricted the competition in the market. However, in the seventies the government of the United States deregulated the market, liberalizing the tariffs and allowing the market to work with more flexibility. Deregulation gave antitrust law and important role in regards to the promotion and preservation of competition in the market.

In Colombia the evolution of the regulation of the airline industry has followed a similar tendency. Since the year 1992 until the issuance of the Resolution 3299 of 2007, the intervention of the Special Administrative Unit of Civil Aeronautics (AEROCIVIL) over the aeronautic tariffs consisted on their approval for each route on a maximum-minimum price basis. The issuance of the Resolution 3299 of 2007 by the AEROCIVIL, that liberated the national and international tariffs of the regular air transport of passengers had an immediate effect of increasing the competition, reflected on the substantial decrease of tariffs and the entrance of new firms.

Taking into account this context, the purpose of the paper is to present in detail the special competition regime in the Colombian aeronautical sector. The document explains the faculties of the as the competition authority of the aeronautics sector and analyzes the commercial policies of airlines and travel agencies.

Full Content: SSRN

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