ABSTRACT
The new freedom in the air In mid-1972, the makers of the Anglo-French Concorde received very good news from China. The People’s Republic had agreed to the purchase of three of the new supersonic transports. The Chinese made their announcement in the same two-month period as Air France and the British Overseas Airways Corporation (BOAC), the flag carriers of the countries building the pace-setting airliner, committed to a total of nine Concorde supersonic transports and the government of Iran decided, after the Shah piloted a personal test flight, to buy two for Iran Air (Trubshaw 2000). The Concorde seemed to be on a roll. Thirty-three years later, it was Boeing’s turn to be blessed with welcome Chinese orders for a new airliner. In early 2005, China’s government announced orders for 60 new 787s (Yu 2005). The good news for Boeing came during a two-month period in which two European airlines, Blue Panorama Airlines from Italy and First Choice Airways from the United Kingdom, also placed orders for ten 787s. The new orders seemed to augur well for the Dreamliner. The similarities in the two stories belie the enormous changes in the aircraft and airline industries in the intervening few decades. The preceding section of this book dealt primarily with changes in aircraft and with the companies that build them. In this and the next two chapters, we turn our attention to changes in the airline industry. Consider, for example, the difference between Air France and BOAC on the one hand and Blue Panorama and First Choice on the other. In the early 1970s, Air France and BOAC were state-owned airlines of long lineage. They purchased the Concorde under some duress as they fulfilled their obligation to support their governments’ prestige project. Ultimately, they were the only airlines to buy the Concorde (the Chinese and Iranian orders were never consummated). Blue Panorama and First Choice, conversely, were new carriers in 2005, part of the huge expansion in the number of airlines competing in the skies over Europe. The changes in China have been no less spectacular. At the time of the Concorde order, there was only one Chinese airline, the fully stateowned Civil Aviation Administration of China (CAAC), which was also charged with operating the country’s airports and its air traffic control system (B. Graham 1995: 191). The China of the early 1970s wanted the Concorde for the esteem it
would earn, not because the supersonic transport made commercial sense. The Chinese government ordered the 787s, conversely, on behalf of six different carriers that very much needed additional capacity.1 Indeed, China had become the fastest growing major commercial aircraft market on the planet – a distinction rooted in a variety of factors, including the increasingly competitive Chinese airline industry. The changes in China and in Europe convey a measure of the dynamism in an industry rife with new carriers and emboldened by new freedoms – the freedom to choose routes, to determine what aircraft will be used on those routes and at what frequency, and to set fares and air cargo rates. Over the past two decades in particular, the change in government policies towards the airline industry has been more dramatic than that in aircraft technologies. The last revolutionary advance in aircraft technology was the introduction of the jet engine more than fifty years ago – or perhaps the advent of fly-by-wire in the mid-1980s. Conversely, the changes in the airline industry, including the privatization of dozens of carriers and the removal or relaxation of rules governing where and how airlines operate – developments that have been strongly concentrated in the thirty years since 1975 – do comprise a genuinely revolutionary transformation. The Malaysian carrier, AirAsia, for instance, has broadened the scope of the traveling public in Southeast Asia; but it has done so using a fleet comprising rather unremarkable Boeing 737s and Airbus A320s. What makes AirAsia’s success and that of other low-cost carriers (LCCs) possible is not the development of new airliners, but the development of policies that permit competition with the full-service network carriers from the industry’s past. LCCs have taken advantage of that freedom to introduce new ways of running an airline that dramatically lower the cost of air travel. In this manner the liberalization of the airline industry has liberalized access to the sky. AirAsia emblazons the audacious claim, “Now everyone can fly” upon every one of its aircraft. That is still not true, but in countries like Malaysia where only 6 percent of the population had ever flown in 2005 (Aviation Week & Space Technology 2005a), the arrival of LCCs is having a significant effect. Yet it is not just the LCCs and the other startups that have been affected by the new freedoms in the global airline industry. Although the past two decades have witnessed the demise of storied names like Pan Am and SABENA, the more nimble of the network carriers, like British Airways and Malaysia Airlines, have not only survived but even thrived, at least during the industry’s cyclical upswings; for the successful carriers of the past have been the airlines best positioned to take advantage of the globalization of the airline industry. It was Malaysia Airlines, not AirAsia, which operated to 61 foreign cities on six continents in 2008;2 and it was British Airways, not its LCC rival easyJet, that became a founding member of the oneworld alliance, a group of airlines whose schedules are meshed to create an integrated network commensurate with the scale of the global economy. New and old carriers alike operate in an industry made more relentlessly competitive by the partial withdrawal of the state. The “Airbus governments”
will almost certainly not let their plane-maker fail just as the US government could not be expected to sit idly by if Boeing were to teeter on the brink; but few airlines are so sacrosanct. The brutality of competition in the industry is not good news for airline employees but for many travelers and cargo shippers, liberalization has helped to make air transportation routine, unremarkable, and less expensive.
