Globalization Strategies and the Prospects of Increased Competition in the International Airline Industry

Abstract

As governments debate open skies agreements, airlines are often left to find strategies that allow them to survive while waiting for a more liberal trading regime for international air travel. Airlines present an interesting theoretical case because they fail to conform to generally held notions about firm demands for protection or liberalization. The primary confounding factor in analyzing airline behavior is the pursuit of globalization strategies. This paper examines the potential impact of globalization strategies on competition in the international airline market. The conclusion from our initial analysis of four cases is that globalization strategies are reasonable for some airlines, but such strategies may actually lessen the chance for real competition in the market even if ongoing governmental negotiations are successful.