This chapter aims at stressing the role of the prevailing institutional economics regimes in the aviation industry and how these may affect the tourism sector. Starting from a highly regulated environment until the late 1970s, civil aviation had been gradually liberalised in the following decades allowing market forces to shape the business environment. This change had major implications for the accessibility of tourism regions; among others, the free operation of charter carriers and the more recent introduction of low cost air services resulted in a substantial increase of traffic and tourist arrivals. This may be welcoming news but on the other hand, tourism destinations should also pay attention to tourism receipts as well as to the impact of increased flows on the natural and built environment. Section two of the chapter studies the rationale and operating principles of aviation regulation while section three elaborates on the advantages but also the potential dangers arising from market liberalisation. The primary focus is on the airline industry but the discussion also addresses issues related to airports, ground handling services and computer reservation systems. Finally, section four summarizes and concludes.
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