Introduction

The air transport industry, by its very nature, is highly sensitive to cyclical economic movements. Periods of boom and strong economic growth coincide with the entry of new carriers, expanding business, and considerable profit-making. By the same token, downturns impact heavily on the sector and nearly always prompt thorough rationalisation, characterised by waves of mergers and takeovers, as well as bankruptcies and market exits. Moreover, developments in the air transport sector often foreshadow events to unfold in the rest of the economy over the next few months. Hence, the airline sector is like an economic laboratory where new evolutions and trends tend to come to light. As in the maritime sector, thought and action in the airline business have evolved rapidly in recent years. Increasingly, players are approaching the industry from the perspective of air transport chains. Prospective customers are no longer selecting airports and airlines on the basis of their individual merits, but because they belong to an air transport chain that meets their preferences maximally and corresponds to their willingness to pay, despite having their loyalty challenged by low-fare airlines. Hence, the success of those airports and airlines depends crucially on whether or not they belong to a successful air logistics chain. This new approach has gone hand in hand with a degree of specialisation, low-cost passenger transport and air freight being two typical examples. Take the case of air freight. Whereas freight used to be regarded as a ‘side product’ of passenger transport, there are now a number of carriers focusing exclusively on this market and in some cases it is freight that allows the cross-financing of the lower passenger fares, enabling traditional companies to compete in the low-fare market. Likewise, there are now airports (albeit smaller ones) that consider freight transport as their core business. This growing significance of fullfreighter services has been occasioned by a combination of factors, including insufficient freight capacity and stricter safety regulations on passenger planes, a trend towards scale increases, and substantial imbalances between incoming and outgoing flows. So what does the future hold? Which existing air transport activities will expand and which will disappear? Where will new opportunities arise? Which factors drive change? The answers to these questions have implications that go

far beyond air transport as such. Each decision has direct and indirect consequences for – among other things – employment, investments, achievable value added and funding requirements. No wonder, then, that the airline industry is attracting growing interest from scholars and policymakers alike! Clearly it is important that any new developments in the air transport sector should be acknowledged as soon as possible, so that the actors involved can take suitable action. This book intends to contribute to this process of insight. In a series of papers, a number of key factors for success and failure are discussed in detail, whereby attention is devoted to all the major players in the air transport industry. In other words, here is a collection of papers that offer ample food for strategic thought.