REGULATION AND DEREGULATION

Regulation and Deregulation



Regulation and Deregulation

'Air Transport has always been a global industry but one which was served by national firms . Some airlines now want to become global firms but to do so they may have to lose their nationalities in order to conduct their business in much the same way as other transnational industries do' (Hanlon, 2006).

Introduction

In the view of the statement one can say that large global firms are becoming stateless and whether this is a historically new phenomenon. It shows that a great deal of international business in the nineteenth century was not easily fitted into national categories. The place of registration, the nationality of shareholders, and the nationality of management could and quite often did point in different directions. During the twentieth century such cosmopolitan capitalism was replaced by sharper national identities. However the interwar disintegration of the international economy led to the subsidiaries of multinationals taking on stronger local identities and becoming hybrids. Over the past two decades, as the pace of globalization quickened, ambiguities increased again, especially if the focus is the nationality of products and services. Thus, the ownership, location and geography still matter enormously in global airline industry.

The obvious need to maintain and improve the current transportation network is no longer subtle. With the introduction of airliners as transport, society has experienced both positive and negative effects. In our report we would like to quantify these effects. To understand the current air transportation system, we include a small portion of history behind it.

Since the beginning of human culture there has been need of transportation. But it was with the invention of the airplane, that men fulfilled their dreams of owning the skies. The airline industry quickly evolved and became a must for long distance transportation means of the public. The airline industries evolved mainly in the Western world, more so in the US after World War II. However, as the complexity of maintaining a nationwide network grew the government started regulation of the airline industries; thereafter, in the wake of rising prices, and certain airline monopolistic competition, the US Federal Government decided to deregulate the airline industry (Windle, 2000). Following the deregulation, came the changing nature of airline network. The airline industry quickly adapted to what came to be known as the spoke and hub system instead of the previous point to point system. Due to the deregulation a huge decrease in ticket prices and increase in airlines as a means of public transportation was seen. But as the hub and spoke system matured, the aftermath was that most airlines stopped their service for less profitable routes, in turn increasing waiting time for the passengers. But the problems emerged on the airline side as well, when the predatory behaviour of the airline industry halted growth of other airlines. As of now whether deregulation was a better choice or not is still controversial. Throughout the course of the airline evolution the airline industry has affected the ...