Abstract
Latest technological advances, coupled with changing needs and the growing demands of customers, have forced organizations to develop and produce better services. Globalization, which essentially removed trade barriers between nations, bringing to bear the blatant reality that increasing global connectivity, together with integration and interdependence in the economic, social, technological, cultural, political and ecological spheres, have removed all trade barriers, making a world without boundaries, has not worked exactly that way in the air transport industry. Protectionism of market share by States for their national carriers is still alive and well in spite of the fact that globalization brings with it the inevitable corollary of the contemporaneous advancement of technology and growing trends toward liberalism in international trade. The information and telecommunications revolution, which really kick started in the 1980s, dramatically lowered the costs of doing business across national borders. The giant strides made by information technology, which took its incipient steps in the 1990s, together with paradigm shifts in trade practices such as outsourcing and off-shoring, have ensured the opening of a world which no longer sees boundaries that inhibit global trade and information exchange.
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Notes
- 1.
Encyclopedia Britannica defines globalization as the process by which the experience of everyday life is becoming standardized around the world.
- 2.
Arvis and Shepherd (2011), p. 15.
- 3.
Liberalisation of Air Transport Summary: Policy Insights and Recommendations, International Transport Forum, at 4.
- 4.
Organisation for Economic Co-operation and Development (OECD), established in 1961, promotes policies that are calculated to improve the economic and social well-being of people around the world. The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems. The Organization works with governments to understand what drives economic, social and environmental change.
- 5.
Liberalisation of Air Transport Summary, supra note 3 (this chapter), loq.cit.
- 6.
See A Palette of Plans, The Economist, May 30th 2015, at 66.
- 7.
Rumelt (2003), p. 1.
- 8.
Organizational culture is defined as a “dynamic phenomenon that surrounds us at all times, being constantly enacted and created by our interactions with others and shaped by leadership behaviour, and a set of structures, routines, rules, and norms that guide and constrain behaviour”. See Schein (2004), p. 21.
- 9.
See Goksoy et al. (2013), p. 304.
- 10.
Kahreh et al. (2011), p. 27.
- 11.
King et al. (2001), p. 95.
- 12.
“Disruptive innovation” is a term introduced by Clayton Christensen—a Harvard professor—and is essentially descriptive of a process by which a product or service establishes itself with a value network as a new entrant at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. See http://www.claytonchristensen.com/key-concepts/.
- 13.
The International Air Transport Association (IATA) is the trade association for the world’s airlines, representing some 250 airlines or 84 % of total air traffic. We support many areas of aviation activity and help formulate industry policy on critical aviation issues.
- 14.
RPKs are a common industry measure of air traffic which is calculated by multiplying the number of revenue-paying passengers aboard the vehicle by the distance travelled.
- 15.
Enhancement of Air Transport Connectivity and Facilitation, ATConf/6, WP-20, 19/12/12, at 2.
- 16.
Id, 1–2.
- 17.
Arvis and Shepherd (2011), p. 3.
- 18.
Id. 10.
- 19.
Id. 37.
- 20.
Supra, Chap. 1, note 5.
- 21.
Article 6 is arguably the most contentious in the Chicago Convention. In brief, it contends the following: all scheduled international commercial air transport services are prohibited except to the extent they are permitted; all bilateral and open skies agreements are reciprocal and subject to the nuances of aeropolitics and protectionism and arbitrary demarcations of market share; therefore airlines do not have freedom to access of markets; there are rigid and archaic ownership and control regulations governing so called “national carriers; In many instances, this effectively precludes direct foreign investment in airlines; all the above unduly prevent connectivity, which is the meaning and purpose of meeting the needs of the people of the world for regular, efficient and economical air transport.
- 22.
Morphet and Bottini (2012), p. 11.
- 23.
Geoffrey Lipman, How The Travel and Tourism Industry Can Influence Sustainable Growth, http://www.eturbonews.com/59877/how-travel-and-tourism-industry-can-influence-sustainable-growth.
- 24.
Danesi (2006), p. 55.
- 25.
One commentator puts it aptly: “The change in market entry and exit rules altered the way airlines schedule service. Prior to deregulation, it was quite common for passengers to change airlines (interlining) in order to reach a destination because the origin city and destination city were not served by the same airline. With deregulation, each airline was able to expand to serve more cities, and it accomplished this by offering a network pattern called hub and spokes. In this pattern, flights came in from several cities to a centrally located hub airport. At the hub, the passengers switched planes on the same airline and continued their trip out to the final destination”. See Grandeau (1995), p. 11.
- 26.
Katz (2012), p. 4.
- 27.
Short (2013), p. 40.
- 28.
Burghouwt (2013), p. 10.
- 29.
Id. 12.
- 30.
Goedeking (2010), p. 17.
- 31.
See Kim (2005), p. 23.
- 32.
Cook (2008), p. 57.
- 33.
For a discussion on these three innovations see Mezue et al. (2015), pp. 69–70.
- 34.
For a definition see supra note 12 (this chapter).
- 35.
In a 2012 CNN interview the person interviewed said: “The Chinese are shopping a lot more. Retail is booming like a wildfire in China. There are a lot more consumers and they are demanding a lot more services. A lot of Chinese, especially younger consumers, are really into the luxury brands. They associate Western luxury brands with quality of life and sophistication. They want gyms, health care clubs and definitely travel. They want to see the world. The restaurant business is doing very well. The younger generation—people under 30—they are consuming like crazy. They save zero. They spend all of their salary on a Louis Vuitton purse. A lot of them stay with their parents so they don’t have housing expenses. But once they get married, then they start to save”. See Tamy Luhby, China’s growing middle class, http://money.cnn.com/2012/04/25/news/economy/china-middle-class/index.htm.
- 36.
- 37.
Kindergan (2015).
- 38.
Ibid.
- 39.
- 40.
Hanlon (1994), p. 91.
- 41.
Roos and Sneek (1997), p. 154.
- 42.
- 43.
This model was the precursor to the modern oligopoly theories that are now used to represent the structure in airline markets.
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Abeyratne, R. (2016). Achieving Competitive Advantage Through Connectivity and Innovation: An Application in Airline Hubbing. In: Competition and Investment in Air Transport. Springer, Cham. https://doi.org/10.1007/978-3-319-24372-6_7
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