This paper examined the regulatory and policy regimes of the Philippine air transport industry and their effects on the state of competition and market structure of the
industry. There is no doubt that liberalization and deregulation have brought genuine competition in the domestic air transport industry resulting to lower airfare,
improvement in the quality of service and efficiency in the industry in general. The deregulation, however, resulted to the establishment of niche markets, with the big players concentrating on the major routes where traffic demand is heavier while the smaller airlines are flying the secondary and tertiary routes where traffic demand is lighter. Liberalization, however, has yet to be done in the country's international air transport industry. While other countries are adopting more flexible approaches to liberalization and regulation to meet the increasing demand for international air services brought about by the increasing integration of economies, the country is
keeping to its old restrictive practices and policies. The effect of such restrictive policies is a high degree of concentration in the country's international aviation
industry .
The government needs to act quickly to promote competition in the industry. As the experiences of other countries have shown, convenient and efficient air services brought about by greater competition are critical to attracting foreign
investment, trade and tourism. To this end, the paper has identified areas where competition policy should be defined to introduce competition where is none and to ensure that competition where it exists is effective.
