TAL033-1: Report on Critical Economic Issues in the Airline Industry

This report delves into the critical economic issues stemming from liberalization within the airline industry. It examines the current impact of these issues on air transport, analyzing factors such as market access, competition, and regulatory changes. The report further explores how these issues may shape the future of air transport, considering aspects like fuel prices, environmental regulations, and technological advancements. It discusses challenges related to network optimization, passenger demand, and the balance between economic sustainability and environmental concerns. The analysis includes a review of the effects of liberalization on airline yields, competition, and the evolution of airline networks, ultimately aiming to provide insights into the long-term implications of these economic forces on the global airline industry and its stakeholders.

Introduction to the airline industry
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Discuss about the critical economic issue related the Liberalization within airline industry’s
frame work and how it will impact on air transport today..........................................................3
How issue may change air transport in the future.......................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6
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INTRODUCTION
Airline industry is one of the most of prominent and competitive industry in global world. It
will generate huge amount of income opportunities for people. Some of most common in US air
travel service provider. While air transport is one driven by global economy, which is considered
as important driver in global economy that directly employs 4 million people in global world. It
will generate $500-billion in resultant output. In additional, the quality and efficiency
improvement in air passenger service which always contribute to growth in different sectors. The
report will discuss about the critical issue related the economic effect of liberalization on the air
transport industry framework and how it directly impact on the air transportation in current
scenario. Furthermore, it will discuss about the issues and challenges where how they will
change air transport in future.
MAIN BODY
Discuss about the critical economic issue related the Liberalization within airline industry’s
frame work and how it will impact on air transport today.
As the airline business evolves in global world but some recent scenario, it may deals with
the reservation system, leasing of aircraft and intermodal transport (Lykotrafiti, 2019). It is to be
considerable increase large number of bilateral air services. It provide full market access without
restriction on third parties. Despite of facts that many liberalization of international air industry
framework remain formidable challenge of issues in global marketplace (Arblaster and Zhang,
2020). There are various type of difficulties faced due to liberalization, describe the stakeholder
expectation on effect of alternative agreement policy. As a result, it will generate uncertainty of
liberalization so that government adopt the substantial regulatory changed. In this way, it needs
to understand the effects through liberalization process in global world. Furthermore, Economic
effects of liberalization and review impact of air transport.
Nowadays, Many private airline enterprises provide service of commercial transportation
to public, with low demand and high risk of operations. It would not be sustainable with any
support of government (Cullinane, 2019). The rules and regulations imposed by government in
limited competition but higher fares. At that time, it has pointed that fare become unregulated
intrastate routes which have relatively high service level. Sometimes, it did not maintained the
fare by regulations.
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Liberalization event that will may effects on the airline industry while adopting some
challenges in air transportation (Zhang and Graham, 2020).
Most liberalization have brought in the traffic growth which mainly remove constraints on
pricing, service quality and other type of cooperative arrangement among alliance members. In
past decade. Air transport has rapidly increasing progress in term of liberating from different
economic regulation. It provide benefits for society but it has raised the issues such as high
competition level, high labour standards whereas how it can be mitigate with environmental
impact on the industry (Gergely, 2020).
On the other hand, Liberalization allows for airline industry to optimise their network
configuration and also implementing the network which enable carriers to link with small
markets. In order to forecast the passenger increases European countries. As a result, it has found
that decrease in airline yields of 40% and 45% increase their accessibility. In this way, it can
easily compare the changes in the price and other type of good or service in global world. In
additional, oil prices are furthered decline in market, shifting political focus from other
protectionism to customer (Gudmundsson, 2019). Therefore, it has chances of environment
deregulation which gained momentum. Another way, it will increase inflation through higher
competition and downwards pressure on the fares. Afterwards, it has analysed that impact of
liberalization issues which stimulate competition between service carriers. However, it has taken
the place on the large scale with increasing market share (Hinsch, Mandel and Gillen, 2019).
How issue may change air transport in the future.
In Airline industry, a business is expected to be maintained economy sustainable but it
become challenging for industry that burn fuel to aircraft. The industry has committed to
ambitious goal and objective. From 2020, the emission and growth of carbon neutral afterwards
it will cut our net emission and back to half the level. In future, it will increase the demand and
price of fuel in global marketplace (Hinsch, Mandel and Gillen, 2019). The economic issue
related liberalization impact on the airline where they are directly engaged with non-price
competition with inefficiently high quality service. In this way, it has reduced load factor of
airline while prior to deregulation, the overall load factor become fell down below 55%.
However, the efforts related sufficient financial resources and expertise was not completely
successful. In order to promote the competition in global world on the basis of multilaterals.
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In future, it will be introduced another set of competition issue or problem through
constraints. Generally when two route between one or more countries (Linn, 2019). Therefore, it
has been developed the relationship between air transportation and economy. In future, the effect
is particular in airline industry whereas analysis through non-recursive model which easily
confirmed and increase airline network (Hinsch, Mandel and Gillen, 2019). It causes rather than
consequences in the growth of employment. In additional, there are two major barrier occurs for
trade such as time and cost related to the transportation. As per discussion, it has identified that
impact economic on the airline industry in future whereas they can achieve the significant result
by implementing liberalization policies and procedures. Therefore, it help for identifying the
need and requirement in air transportation.
CONCLUSION
From above discussion, it concluded that Airline industry is the fastest growing competitive
industry in global world. It is mainly generate huge amount of employment opportunities for
people. It has summarised about critical issue related the effect of liberalization on the air
transport industry framework and how it directly impact on the air transportation in current
scenario. Furthermore, it is described about the issues and challenges where how they can change
air transport in future.
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REFERENCES
Book and Journals
Arblaster, M. and Zhang, C., 2020. Liberalisation of airport air traffic control: A case study of
Spain. Transport Policy.
Cullinane, K., 2019. Current Issues in European Aviation. Airline Economics in Europe
(Advances in Airline Economics. 8. pp.1-8.
Gergely, M., 2020. Fair Competition in International Air Transport. Air and Space Law. 45(1).
pp.1-28.
Gudmundsson, S.V., 2019. European Air Transport Regulation: Achievements and Future
Challenges. Airline Economics in Europe (Advances in Airline Economics. 8. pp.9-56.
Hinsch, H., Mandel, B. and Gillen, D.W. eds., 2019. The Impact of Liberalizing International
Aviation Bilaterals: The Case of the Northern German Region: The Case of the Northern
German Region. Routledge.
Linn, S., 2019. ANALYSIS ON IMPROVEMENT OF AIRPORT SERVICE AFTER
LIBERALIZATION IN AVIATION INDUSTRY OF MYANMAR (Case Study: Customer
Perspective at Yangon International Airport) (Doctoral dissertation, Yangon University
of Economics).
Lykotrafiti, A., 2019. A Comprehensive Study of Air Transport Liberalization Through the Lens
of Strategic Airline Alliances. Air and Space Law. 44(4). pp.347-391.
Zhang, F. and Graham, D.J., 2020. Air transport and economic growth: a review of the impact
mechanism and causal relationships. Transport Reviews. pp.1-23.
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