While international aviation markets have been extensively liberalised over the last three
decades, this liberalisation process remains incomplete. In particular, the opportunities for
airlines to operate on a 7th freedom basis remain tightly restricted. 7th freedom flights are those
operated between two countries by airlines from third countries, which are not operated through
the third countries nor are extensions for flights to or from those third countries. Nearly all the
traffic directly between two countries is reserved for the airlines of those two countries. The
limits on 7th freedom operations has the effect that competition on many international routes is
not as strong as it could be, and there is little scope for trade in airline services. This means that it
is not possible for the airlines best suited to serving a route, whether they are from the countries
at the ends of the route or not, to actually serve the route. The result is that costs are higher than
they need be, and the gains from international air transport are smaller than they need be.