Effect of Deregulation of Commercial Aviation System in Australia

Running Head: ESSAY
ESSAY: AVIATION

2ESSAY
TOPIC: “Effect of deregulation of the commercial aviation system in Australia”
The Chicago convention of 1944 regulates air transport operations internationally.
Under this, the commercial rights of airlines over international routes are looked over by over
10,000 agreements regarding air services that are bilateral in nature (Koo & Lohmann, 2013).
The Airline Deregulation Act of 1978 removed price restrictions and government imposed
entry on so, which in particular affected the careers that served only specific permitted routes.
Studies regarding the aviation deregulation usually deal with its effect on the airline industry
but, the researcher in this work has tried to address the impact of deregulation in Australia, on
other aspects as well. The act gave rise to strong competition between various aeroplane
manufacturers. Most among them had larger aeroplanes, strong governmental support and
were well established. However, after imposing the Deregulation Act many of these big
airline companies fell and some of the new companies rose (Carpenter, 2018). The effect of
deregulation on changed strategies of airlines, all-round transportation networks, the number
of airline passengers and the roles of travel agencies have been discussed in this study.
According to Quiggin (1997), different Australian carriers have been trying to
develop strategies in order to reduce the costs of travelling due to the growing competition in
the market that resulted due to the deregulation of airlines. Low cost of travelling will attract
more passengers to the Airlines which will help them beat their competitors with higher price
in the market. This is the reason why cost-cutting strategies have become an important aspect
of the airline industry. In this process of reducing costs, the most common area or of tackling
costs for airlines has been its labour. The wages of labour has been cut down to an extent for
cost efficiency. Different Strategies for operating cost reduction has been taken up by
Australian Airlines. Fu, Oum & Zhang (2010) opined fuel hedging contracts which fix the
cost of fuel for a long time can be proven economically beneficial for the airline companies
during periods of price rise of fuels. Efficient negotiation of airport fees can cut down the
expenses of an airline to a significant extent. Along with these, setting benchmarks and
keeping a proper record of investments and profits every year will help the airline analysed
its success or failure over reducing operational costs. This will guide the airline in the proper
direction.
Growth in the airline industry that had accompanied the Deregulation Act has resulted
in the economic growth of Australia. This economic growth in return had helped the