The Challenge of Realistic Proposals for Global Deregulation of Air Transport

According to the author of this article (Paragraph No. 25,011), revision of ownership and control arrangements should be regarded as the essential first step toward putting the global airline business on a more rational footing. In this paper, the author first addresses the movement toward global deregulation of air transport in terms of its glacial pace, which he links to an apparent lack of a broad constituency in the aviation industry who see either a pressing need for change or clear benefits to themselves or their organizations. Assessing whether the necessary coalition - including politicians, public opinion, and organized labor - could come together to effect a change, the author asserts that the major players in a total deregulation and commercial globalization inevitably will take "a strictly utilitarian approach ... with self interest at the forefronts of their minds." He feels that changes will come, however, concluding that carriers consider the current system of airline alliances to be an unsatisfactory waystation on the road to global consolidation." According to the author, the primary disadvantages of alliances are their ability to provide three of the real benefits of mergers and acquisitions: (1) uniform quality assurance, (2) true global branding, and (3) cost cutting. He adds that alliance arrangements do not permit a firm's best practices and standards to be applied system-wide, due to the fact that alliances operate by consensus. As alliances spread more widely, the author predicts that their deficiencies will become more obvious, creating a climate of opinion favoring acquisitions and takeovers. To effect the regulatory changes necessary to permit global deregulation, a majority consensus in the International Civil Aviation Organization becomes necessary. Furthermore, political support in the U.S. is mandatory if the rules for airline ownership and control are to be changed. Opposition to domestic airline consolidation in the U.S. may be addressed by adding foreign competition on domestic routes and by permitting startup carriers that are backed by foreign airlines, the author says. If a consensus for change could be created, nationality would cease to be an issue in the exchange of traffic rights between countries, and true open skies would be achieved.

  • Corporate Authors:

    International Aviation Law Institute

    DePaul University College of Law, 25 E Jackson Boulevard
    Chicago, IL  United States  60604
  • Authors:
    • Stirland, Richard T
  • Publication Date: 2004

Language

  • English

Media Info

  • Media Type: Print
  • Edition: Transfer Binder 1: 2001 to 2004
  • Pagination: pp 13051-13058
  • Monograph Title: Issues in Aviation Law and Policy

Subject/Index Terms

Filing Info

  • Accession Number: 01149587
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Nov 18 2009 12:04PM