The formation of a single Australasian aviation market: the political economy of New Zealand policy towards Australia

Abstract

This study investigates the creation of a Single Aviation Market, resulting from negotiations between the New Zealand and Australian Governments. The August 1992 Memorandum Of Understanding, at the time heralded as a major achievement in reducing bilateral barriers to services trade, came to demonstrate the extent to which both nations held significantly different objectives. Through the use of an institutional perspective to explain the New Zealand policy-making process, the thesis argues that internationally inspired liberal ideas lay behind the New Zealand and Australian decision to create a single market. However, differences in definition and outlook exposed limitations to its full achievement. While New Zealand argued that a single aviation market should be within, between and beyond both countries, the Australians believed the definition should be confined to within and between, but not beyond. The initial failure to reach a workable definition over what constituted a 'single market' contributed to the loss of Australian political support in August 1993 for further reform. Specifically, this involved the stalling of inter-governmental discussions on a variety of issues, including the settlement of a new Air Services Agreement within the CER framework, both countries jointly trading international traffic rights, issues of ownership and control of designated Australasian airlines operating on the trans-Tasman and Australian domestic routes, the setting of tourism objectives and a full exchange of 'beyond rights' with the removal of remaining capacity constraints.