Competition Law in Air Transport

Abstract

Airlines have to change and adapt to the world economy. At the time of writing, the economies of the developed countries of Europe and North America were slowing down, at least in terms of growth compared to pre-financial crisis times of 2008–2010 and there was rapid economic growth in the East in the emerging economies. Concurrently, deep and contentious debates were taking place among regulators on aviation and climate change that were focused on air transport in particular. Against this backdrop, the buzz word was connectivity, on which many airlines anchored their competitive stance, much to the annoyance of the proponents of protectionism. The air transport industry (i.e. the airlines) like any other industry has to formulate its competitive strategy on the conduct of certain inevitable forces, such as new entrants into the market; disruptive innovation of competitors; customers and clients’ changing demands; bargaining power of suppliers; and demands of the workforce. Cost reduction and product variance, as needed, are the main drivers that cope with the forces of competition. Added to these key determinants are economies of scale, where large scale production bring costs down, and capital investment which helps enhance quantitative and qualitative production. These form a cocktail of stimuli for robust competition, provided government regulation is conducive to competition in air transport.