What do we mean by a level playing field in international aviation?

Over the past several decades international airline markets have been progressively liberalized. An issue that has emerged is whether there is a level playing field (LPF) between the carriers of the two nations that are party to a bilateral air services agreement. While the International Civil Aviation Association (ICAO) has drafted a model LPF clause for air services agreements and the European Commission has negotiated a few agreements with LFP clauses, the issues involved are at best vaguely specified and often ignore key elements of economics. This paper represents an initial attempt to develop a more comprehensive discussion of aspects of LPF definition. The paper categorises issues as either legitimate concerns or as issues that are matters of comparative advantage in international trade or that can and should be dealt with by competition or general international trade law rather than by sector specific bilateral trade treaties. The topic of subsidies in LPF assessments is particularly addressed as economic welfare optimization can justify subsidies in some cases and because subsidy to infrastructure is more widespread than some stakeholders may realize.