Airline competition and implications for strategy

Abstract

Air travel has changed the way people live and experience the world today. The airline industry is a strategic sector that plays a fundamental role in the globalization of other industries as it promotes tourism, world trade, and foreign investment and, therefore leads to economic growth. However all airlines within the industry operate in a highly dynamic environment where various legal, social, technological and economic forces interact with each other, thus influencing their decisions and actions. The ingredients come from the worlds of competition policy and international trade policy. Competition is a condition that every business must continuously recognize as it is a major factor in determining success or failure of the business. Competition creates an interesting tension, the intensity of which have major, often surprising, implications for strategy. The environment in which airlines compete does influence what the airlines can and cannot do.