ABSTRACT

Painful though it is likely to be for some airlines and their workforces, the transition which the two volumes of this book have been examining is in fact a restructuring of the industry which - if allowed to run its course - will lead eventually to a marked change in the composition of firms supplying the world’s output of air transport services. Market forces, left unconstrained in their pursuit of efficiency, have the potential to alter both the number and geographical dimensions of these firms. That institutional rigidity will in fact slow the transition was made clear in chapter 3 of Volume One. Nonetheless, powerful pressures for change are emerging from all four of the environments identified in the first volume. Examples of these pressures include:

sociopolitical environment: the growing momentum of regulatory reform, which is materializing in parallel with a widening perception amongst stakeholders that airlines should be profitable commercial enterprises rather than just tools of public policy;

economic environment: the shifting global balance of economic power, which is taking place within a context of simultaneous globalization and regionalization;

technological environment: the constant development and rapid diffusion of new production and marketing technologies; and

competitive environment: the changing relationships between many airlines and their suppliers and distributors, the worsening of infrastructural constraints at key points in the global air transport system, the enfranchisement of increasingly demanding and knowledgeable customers with greater choice, and the intensification of competition for the loyalty of those customers.