Business Research: Airline Industry Competitiveness Literature

This research proposal abstract examines airline industry competitiveness, focusing on the impact of deregulation and the application of core theory. It reviews four academic articles, identifying common themes such as industry problems, solutions, and the effects of deregulation, as well as different themes like liberalization of air transport and the need for remodeled airline competition. The study acknowledges limitations, including difficulties in gauging diverse markets and measuring consumer rationality. Future research directions suggested include further studies on liberalization, deregulation, and the impact of firm coordination on competition. The articles collectively contribute to understanding the complexities and potential improvements in the airline sector.

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BUSINESS RESEARCH METHOD RESEARCH PROPOSAL
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ABSTRACT: AIRLINE INDUSTRY COMPETITIVENESS
A summary of the theory and progression in the field
Competition in the airline industry has been severe since the entire platform was
deregulated in the year 1978. Proponents of deregulation of the airline industry were of the
opinion that more competition would be useful in helping to improve the efficiency of the
industry in general, and facilitate the reduction in prices, while channeling all benefits towards
the consumers in the same sector (Rghavan 2013, p. 5). The financial stability of the airline
industry remains questionable, considering the recent sparks of bankruptcy filings in different
regions across the globe. Terrorist attacks have also compromised competition in the sector,
especially with the major carriers that currently suffer financial distress, and numerous labor
issues that have been associated with the correct woes of the airline sector (Raghavan 2013, p.
13).
The core theory is the primary focus in this section, and the theory helps explain the
magnitude of the problem faced by the airline sector. According to the core theory, competition
in the airline industry is likely to lead to a core problem, considering the lack of stable
equilibrium, hence compromising all trends and operation (Raghavan 2013, p. 12). Competition
in the industry which is considered to be destructive is also strengthened by the fact that
deregulation eliminated price cutting, which was necessary then. Since the theory was proposed,
a lot of significant developments have taken place. The core theory has been further improved to
ascertain that under conditions such as noncompetitive practices, efficiency-enhancing roles of
the airline market may not be entirely effective.
This means that both the producers and the suppliers yearn for better competition. The
theory also sheds more light on the notion of efficient competition, as well as corporation

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(Raghavan 2013, p. 12). The theory suggests that all agents in the market may cooperate, and
compete at a single point in time with a significant goal, which is profit maximization. Concepts
advanced by the core they are related to most standard concepts in economics (Raghavan 2013,
p. 2). The most significant aspects of the theory relate to avoidable costs, sunk costs, divisible
versus indivisible demand and the empty core. The empty core is a situation where stable
equilibrium does not exist, and in this case, industry competition leads to an empty core problem
in the short run.
Common themes/findings across the four articles.
The four articles address the major aspect affecting the airline industry, with a focus on
competition. Airlines in the industry are considered to have opted to design specific strategies
which are keen to make use of different dimensions (Michael 2015, p. 30). In all the articles, the
major issues considered include industry problems in the airline sector, as well as solutions to
mitigate the prevailing issues. For instance, antitrust issues, litigation and public policy issues
such as safety are discussed in all articles (Renard 2014, p. 14). Apart from industry problems,
solutions and strategies, all articles focus on the airline sector effectiveness, and the aspect of
deregulation has been briefly considered across all sources. The airline sector remains the most
competitive platform, generating a lot of income for the country, considering the revenues
collected and profit margins generated. In the long run, shareholder interests which are
associated with wealth maximization have to be prioritized, which puts more pressure on
management to enhance performance in the sector (Hoon et al. 2012, p. 12).
Different themes/findings across the four articles.
Hoon et al. consider the impact of liberalization of air transport on competition, as well as air
passenger traffic. The article by Michael Levine focuses on the concept of airline competition

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especially in the deregulated market segments, as well as the theories, firm strategies and public
policies governing operations in the same sector (Michael 2015, p. 30). The major theme in the
article by Oliver Renard is on the need to remodel airline competition. The author recommends
strategies on the same, to improve the efficiency of the entire industry. Raghavan’s article is
more centered on the theme of core sustainability, where the core theory in the airline sector has
been extensively discussed. Another concept which has been focused on is the liberalization of
the international aviation market (Raghavan 2013, p. 2). The articles prove that most of these
liberalization efforts have been partial and others complete for decades now. This, in turn, calls
for increased deregulations and ownership controls, to protect the rights and interests of all
shareholders in the industry.
Study limitations and how these differ from the various study designs
The primary study limitation addressed across the study designs includes the inability to gauge
the different markets, mainly where other factors aside from price and competition affect the
airline sector. This, in turn, makes it hard for the research sampling and stratified approaches to
be used in data collection (Raghavan 2013, p. 2). Another imitation addressed primarily in the
qualitative design is the inability to gauge and measure aspects such as consumer rationality and
policy implications. In the qualitative approach, the administration of data collection materials to
a wide range of participants is a significant issue, which led to increased research hurdles.
Future research directions proposed in the articles.
The study on the concept of liberalization and deregulation has been encouraged, considering the
scarce data on the same concept (Hoon et al. 2012, p. 12). Positive effects have been linked to
increased competition in the airline sector, which in turn leads to a price reduction and
stimulation of growth of the traffic. The second element is productive efficiency, which ends up

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benefiting as a result of the optimization of the network operations in the industry. Another
research area of study has to do with firm coordination for the sake of minimizing competition in
the airline sector. Coordinated market power affects overall efficiency, which needs to be studied
under the principles of economic theory. Most researchers hold on to the fact that airline
cooperation is anticompetitive, a field that needs to be further studied. The four articles are of
utmost relevance in the airline sector (Hoon et al. 2012, p. 12). They are focused on a wide range
of activities, concepts, strategies and theories which all impact the airline sector. Proposed
theories and reviews under consideration have helped shed light on research gaps and areas
which need to be worked on for increased efficiency.

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References
Conceptual article (proposed theory)
Raghavan, Sunder. 2013. Application of Core Theory to the Airline Industry. Available at:
https://ntrs.nasa.gov/search.jsp?R=20050156079 2018-04-28T01:50:59+00:00Z
Quantitative article
Michael E. Levine. 2015. Airline Competition in Deregulated Markets: Theory, Firm Strategy,
and Public Policy, 4 Yale J. on R Available at
http://digitalcommons.law.yale.edu/yjreg/vol4/iss2/6
Qualitative article
Renard, Oliver. 2014. Modeling Airline Competition. Network Economics Consulting Group
offices. Available at: https://crawford.anu.edu.au/pdf/research/sirc/air_conf_Renard.pdf
Mixed method article
Hoon, Tae., Zhang, Anmin & Fu, Xiaowen. 2012. Air transport liberalization and its impacts on
airline competition and air passenger traffic. The University of British Columbia, and Embry
Riddle University. Available at:
https://pdfs.semanticscholar.org/e012/f406a187503d1aadffade44771dfd4f095fd.pdf