Introduction and Statement of Purpose
Ronald Lieber (1997, p. 88) has stated that "as long as there are airplanes, there will always be some crazy entrepreneur trying to get you from here to there for less than United and Delta." In the international airline industry, the notion that "bigger is better" has led to industry-wide consolidation via mergers and acquisitions as national barriers to market expansion are diminished (Merger, 2000). At the same time, there are growing concerns being expressed by consumers and regulatory agencies alike that consolidation of airlines on a global scale may not necessarily be in the best interest of these groups. The airlines may be opening the door to some kind of re-regulation both in the United States and in Europe.
For example, Air Cargo World (Merger, 2000) reported that consolidation and the creation of designated hubs and well as codesharing agreements among carriers is proving troubling to regulators across the globe. Questions of treaty obligations and rights, coupled with impact issues such as restraint of competition, are of increasing significance. The purpose of this report is to examine these matters in the context of an international industry environment that faced difficult times in 1999, when a rise in fuel prices and growing market competition drastically effected the budgets of both domestic and international carriers (World: International airlines..., 2000). An overview of the industry will be followed by a discuss of hub systems and their effects, codesharing agreements and strategic alliances, Internet ticket sales, and related matters.
In 1999, as noted above, the international airline carrier industry faced a difficult year (World: International airlines..., 2000). Many carriers found that increased in fuel prices and competition from the larger carriers and the newly merged entities made it impossible to cover either basic operating expenses or fleet ren...