Global Airlines

The global airline industry will faces an aggressive competition due partly to the growth of airlines and the expansion of low-cost carriers in the Middle East,. Still, the study concluded that 2013 was a successful year for the industry, with global airline revenues expected to have reached a new high of $718 billion. Thanks to Obama lowering fuel, the prices helped more flights and passengers. Global Airline and carriers have increased their share of that to more than 25% last year. The report expects the low-cost carrier model to spread to the Middle East over the next few years.

Middle East carriers have a competitive advantage on international routes because they are well-funded and have lower fuel costs. They've placed a record number of orders for wide-body aircraft for decades, signaling their intent to expand even moreover the years. Global airline industry is undergoing a recovery marked by increased revenues and profitability, but the results widely vary between regions, such as North Americas and the Middle East and cost pressures remain a challenge across all markets. U.S. transportation and logistics leader for PwC said in the report. “With growth in expenses and increased competition threatening future profit growth, many airlines find themselves at a crossroads. They can continue to make small incremental improvements, or take bolder steps to become the 'connected airline' of the future, applying technology and analytics to achieve more significant advancements."(Trejos 2014)

Since 1978 Airline Deregulation Act, air travelers in the U.S. have enjoyed greater choice in service and lower fares due to this act. Despite the success of domestic liberalization in the U.S., the European Union, and other nations, international air travel is still heavily regulated, and the U.S. domestic air travel market remains closed to foreign competition. Under current restrictions, non-U.S. citizens can't control no more than 25 percent of the voting stock of a domestic U.S. carrier, and foreign-based carriers aren't allowed to carry paying passengers between U.S. cities. To achieve the full benefits of an open aviation market, I believe congress should grant foreign-owned carriers the right to provide domestic air service in the United States.
Thanks to the 25 years of deregulation, the United States carriers can efficiently compete with foreign competition in the domestic market. Any national security issues that the United States would be left without a civilian air fleet big enough to meet the requirements of a national emergency. Due to more competition in international markets and domestic airlines, in my opinion I believe the FAA and Government should revise all laws that restrict for foreign participation in the domestic U.S. airlines and come up with some policy that would help both national and international airlines.

References

 

Trejos, N. (2014 June 5). Global airline industry to face more competition. Today in the sky: Retrieved from: http://www.usatoday.com/story/todayinthesky/2014/06/05/global-airline-industry-competition-low-cost-carrier-middle-east/10028127/.com

Button K. J. (1998 November 24). Opening U.S. Skies to Global Airline Competition. Retrieved from: http://www.cato.org/publications/trade-policy-analysis/opening-us-skies-global-airline-competition.com