Deregulation Transformed Aviation in 80s: Unifying the European Market - Essay Sample

Introduction

During the 80s, a lot of changes had taken place with deregulation in the United States' impact on the global aviation industry (Burghouwt & Huys, 2012). During the period, a lobby of airlines was in favour of deregulation, supported by numerous economic theories, which impacted on the unification process in the European aviation market. The European Council adopted a deregulation package that aimed at creating the single European aviation market that did not have significant regulatory restrictions regarding the competition between the European airlines (Burghouwt & Huys, 2012). In the new developments, event planners have witnessed a massive shift in the manner in which they have to develop policies and management strategies. Numerous limitations can be witnessed in the modern market, which has led to managerial barriers. While the European Union has a right to intervene in case the market is structurally out of balance, the public service obligation is a challenge as the aviation planners do not have a case of reference regarding the management of the airports (Doganis, 2001). While the aviation industry is adopting a new network strategy, the increased competition implies that each airport must manage its logistics singly. Therefore, although the deregulation policies facilitated the development of a more robust industry and the possibility of more profits, a lot of adaptation is needed in the aviation industry for event planners to be effective.

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Global Strategic Alliances

The airline industry faced an airline alliance frenzy since the 90s, which was one of the consequences of deregulation. In the modern market, the global airline alliances can be identified as the most important areas regarding the network expansions that have significantly impacted on the airports globally (Burghouwt & Huys, 2012). The developments can be described as hub-and-spoke networks of two or more large airlines that can operate in a geographically distinct market. Such developments have led to an increase in the size and scope of the airline network, which has resulted in an increase in passengers and the overall volume of the freight. An increase in the volume of freights and passengers implies that the airport planners must plan for more volume management and how to handle the increased passengers (Burghouwt & Huys, 2012). With the global security concerns regarding terrorism, airport planners have to undergo numerous logistics to ensure that they handle the cargo and the people professionally and still manage the global menace (Graham, 2001). Also, the increased potential dangerous diseases and infections like the Coronavirus make the management of the airport more complicated without proper regulations for travel. As such, the global aviation industry demonstrates a lot of potential for the development of alliances that are aimed at reducing competition and bypassing the nationality rules. Different countries have the nationality rules as well as other regulatory barriers that can impact on the cross-border acquisitions and mergers that can be hard in the modern times without global regulations (Peneda, Reis, & Macario, 2011). Therefore, the deregulation policies have resulted in the complexity of the management of airports between one country to another.

Increased Volatility

The deregulation policies and the non-liberalized environments have seen an increase in the network strategies regarding the European carriers and dramatic changes in the airport planners. One of the characteristics of the modern aviation market is volatility and the increase in new requirements for the airport layout and functions, which have a significant impact on the airport planners (Burghouwt & Huys, 2012). The aviation industry has continued to become more volatile. For example, the deregulation policies abolished the extensive financial state support for the carriers. In the modern market, it has been noted that when the carriers are not able to perform and function efficiently, they are likely to disappear from the arena or merge with the other carriers. This means that the airport planners have to be aware of the possible management and how to cope with the bankruptcies of the home carriers. Such airlines are likely to lose a large number of passengers, especially regarding the transfer of the passengers (Dobruszkes, 2009). Besides, deregulation has enabled airlines to be free to enter exile routes. Besides, the intensification of the hub-and-spoke networks by the airlines increased the volatility of the networks. The airports and the home carriers are, therefore, competing for the transfer traffic. Such volatilities bring complexity regarding the management of the airports.

Commercialization

Deregulation and liberalization have led to the changing of network behaviour of the airlines that have significantly impacted on the management structure of the airports, which has a significant impact on the way airports are managed. Such changes have a lot of implications regarding the functioning of the airports, and, therefore, the complexity in airport planning (Burghouwt & Huys, 2012). During the time of bilateral regulation, the airports were seen as public utilities that had an obligation towards the public service. In this regard, the management of the airports was relatively simple since the provision of the infrastructure for national purposes was the core task, and other few business skills and competences were required. However, liberalization and the reduction of regulations means that the airports have a duty to meet the needs for new customers of the airlines and still facilitate a proper competition in the volatile modern market (Graham, 2001). One of the strategies that have been adopted by the companies includes the adoption of the commercialization process. Through this process, the airports can now be managed as business-like markets, which offer opportunities for market-oriented approaches in the management of airports. Therefore, airport planners have a proactive role in marketing and introduce new business skills for financial management and quality management. Besides, the deregulation policies have provided opportunities for differentiation strategies by the airport...