This doctoral thesis explores the predicted effects of air service agreement liberalisation within

Hong Kong. To understand this, the research was guided by three key objectives, firstly to

quantify and evaluate the restrictiveness of the current bilateral Hong Kong air service agreement

regime, secondly, to establish the effect that air service agreement liberalisation will have on air

fares, passenger traffic demand and frequency and thirdly, to understand the perceived risk of air

service agreement liberalisation in Hong Kong.

To achieve these objectives, a mixed-methods approach was adopted which consisted of three

phases. In the first phase, a previously tested fixed number of established air service agreement

conditions were analysed to develop a PCWI, allowing each agreement to be quantitatively

assessed on a scale from zero to one in terms of its level of liberalisation. The second phase

involved running a series of regression models to evaluate the significance of the PCWI variable

in influencing key outcomes such as air fare levels, passenger traffic demand, and flight

frequency. In the final phase, a conceptual model was developed to assess the risks associated

with liberalising air service agreements. This model was then validated through expert interviews,

which provided insights into the potential challenges and risks specific to liberalising air service

agreements in the context of Hong Kong.

The findings reveal that air service agreement liberalisation would have a transformative impact

on the aviation sector in Hong Kong. In particular, the research indicates that liberalisation

would result in a marked reduction in air fares, which would in turn, make air travel more

accessible to a broader range of consumers, thereby stimulating passenger traffic demand.

Consequently, as more people begin to travel, flight frequencies would also increase to meet this

growing demand.

This thesis makes several important contributions to the body of knowledge on air service

agreement liberalisation. First, on an empirical level, it introduces an innovative method for

quantifying the restrictiveness of air service agreement regimes through the development of the

PCWI, allowing for a more comprehensive and reliable assessment of air service agreement

regimes. Second, the thesis offers a theoretical contribution through the development of a

conceptual model of air service agreement liberalisation risk. This model helps to identify and

categorise the various risks associated with liberalising air service agreements, ranging from

political and economic uncertainties to regulatory and operational challenges, serving as a

foundation for future risk assessment and strategic planning in liberalisation efforts.