Deregulation And Globalization

International business refers to all forms of business operations linking different countries. This works over wide geographical regions. However, for there to be a smooth process in the operation of the same, countries involved always have to come up with decisions and agreements on how it has to be operated. Ball, Don, et al (2009) state that for there to be binding agreements between various players in business alliances, all parties have to be satisfied. If not the mergers will definitely fail. Normally, such accords act as impediments to the operation of the international business if certain parts curtail the rights of partners’ involved. An insight into the nature of international business gives experts an avenue to ameliorating the loopholes that constantly emerge. I choose to deal with matters regarding international business as they regulate all forms of business entities in the entire world. The process of regulating the nature of operations of international business provides a daunting task for business corporations to easily and profitably exist. In this line therefore, I seek to analyze the situations in the air transportation with relation to how it contributes to the operations of the international business.

Research documented by Dr. Zhi. H. Wang (2004) actually shows the existing differences in the process of liberalizing air transport in various demographic regions. This liberalization has had a direct market change for the players involved in air transportation. It is the actual reason for the creation of most strategic mergers between various airline companies. Such mergers and deregulation have had an impact in the globalization of air transportation and should thus be carried out hand in hand. They have resulted in the sustainable growth of the individual countries, economic situations as well as the well being of the individuals travelling. Obstacles that existed before in air transport sector such as issues to do with deregulation have thus been done away with. Wang holds the view that the multifaceted nature existing in international business setting today comes from a variety of reasons which occasion long term challenges. It is such challenges that continue to affect the procedures and basic advances towards globalization.

In this measure therefore, I seek to delve into this challenging environment that presumably is the major discerning issue in international air transport system. The experiences of September 11 cannot be easily forgotten. The abduction of aircrafts for use in terrorist attacks caused a major upset in the transport sector. Consequently, a remarkable decrease in passengers also occurred. Apart from this, other major troubles sprung up including new regulatory directives, inability for some companies to source additional funding, and an unprecedented rise in jet oil prices. These situations were further worsened by the halting of various airline operations and the rescheduling of certain deliveries by the aircrafts. According to Philling (2001) all efforts aimed at attracting back passengers has caused a continuing reduction in airfare sometimes creating losses.

One might therefore ask why many airline companies agreed on having alliances. The answer to this lies in the fact that as long as wars about prices are waged amid financial problems, economic recessions, terrorism, and even competition from each other, there will always be losses to contend with. I strongly support the idea that the best way to stop this is in the formation of mergers in order to sustainably profit from this venture. Airline mergers have been in effect since the 1990s. Alliances have also been as a result of countries seeking to tap into the basic incentives that come with membership. This is facilitated as a matter of fact by the signing of major airline accords by the various nations that enter into such agreements. A historical fact suggests that most international corporations have been wary of venturing into this airline business due to the regulations on alien equity ownership and entry by foreign players into domestic routes (Staniland, 1997).

In the face of these very difficult scenarios, most international operators find it appealing to enter into such partnerships so as to gain entry into fresh market and offer certain services (Oum, Park, & Zhang, 2000). In my view therefore, it is very imperative that a combination of deregulation and liberalization of the airline transport be sought since they effectively support each other. The issue of liberalization still continues to be of concern since it promotes globalization which may lead to a number of problems as much as it results in sustainable development and improvement in the living standards of the people.

There is documented evidence about the progress of the liberalization process from periods in between 1978 to 2003. In 1978, the United States decided to deregulate its transportation system so as to free up on the markets (IATCA, 1979). This act leveled the playing field for the other entrants into the market through the start of various policies that were friendlier. Later on a number of mutual agreements were undertaken that led to a number of operational airlines being formed. In March, 1992, there were agreements that saw the opening up of the skies. This was spearheaded by the United States. While it existed, the United States was better able to have its air carriers explore many other forms of liberalized market segments of the entire globe. One among the very first of such documented accords was between the Netherlands and the United States. It was carried out in September 1992. Basing from the above activities that occurred in the said years, I strongly hold the view that it is these mergers that were the precursors towards various forms of relationships such as IT, ground handling and sales of many products.

I strongly agree with the assertion that deregulation brought the sanity that was missing in international business. It opened up closed markets and led to a further improvement in the market effectiveness. When it was introduced it came in three segments. The first segment that started in January, 1988 permitted all the companies involved to increase their capacity in the routes that they practiced. They would also get entry into certain markets and also to dictate on the fares that were to be paid on the routes. The following package saw to it that all regulations that had been put upon airports removed. It also lessened the nature of the mutual contracts that existed then. The final package was put in place on June 1991. All this packages were the ones that were essential in the blockage of any form of discrimination against any particular airline based on forms of nationality or other discrimination (Shon, 2003). It was a plus in the direction towards the opening up of the international markets. This further boosted the economic situations of the countries that were involved.

It is only fair that I also look into the advantages that have been necessitated by the liberalization of the air passenger services. This is so because the number of air flights remarkably sky rocketed, the market dominance and shares, city pairs and an increase into the number of air carriers. This provided a right step into the right direction. The actual removal of the barriers of entry into this industry further created a conducive environment for other competitors in the industry. This therefore means that as we endeavor to free up the markets for international operations, the required conditions for the operations of the airlines is also effectively facilitated. This goes a long way in the development of not only the airliners but also the individual countries involved in these mergers. It also enables all the multi national companies to have a fair playing field with their competitors in the field.

To those concerned with the operations of the international market, liberalized markets and deregulation provide quite a good environment for businesses to prosper. Entrepreneurs and international managers can thus take advantage of the windows of opportunities existing to set up quite successful business enterprises. Currently, several individuals have taken advantage of this situation and have set up quite successful ventures in air transport. Such an entrepreneur is Sir Richard Branson whose virgin Atlantic airliners operate quite competitively with the other major players.

In conclusion therefore, a study into the air industry in the U.S suggests that small sizes of functions tend to prosper. However, I disagree with those that are of the view that international markets cannot pose a risk for the operation of the various airlines. This is because the opening up of these markets encourages other forms of activities such as terrorism and other economical wars between countries. However, the focus in the markets and the step by step development of the world markets could be the only remedy in dealing with the quite an unsteady and doubtful situations into the future. The opening up of free markets and the strategic mergers have participated in a major way in the growth of economies, protection and dynamism. However, although this view that globalization has various benefits, it is also very true that other challenges are created as a result.

References

IATCA. (1979). International air transport competition act of 1979. United States, PublicLaw.

Oum, T. H., Park, J. H. & Zhang, A. (2000). Globalization and strategic alliances: the case ofthe airline industry. Pergamon: Elsevier Science.

Philling, M. (2001). Crisis action, airline business. Cambridge: Cambridge University Press.

Staniland,M. (1997). Surviving the single market, corporate dilemmas and strategies ofEuropean airlines. London: St Lucie’s Press.

Shon, Z. (2003). The study of airline merger. New York: Jalic Inc.

Zhi, H. (2004). Deregulation and globalization: process, effects and future challenges to airtransport. Cambridge: Cambridge University Press.