Progressive Commercialization of Airline Governance Culture

Progressive Commercialization of Airline Governance Culture analyses the transition of the airline sector from the not-for-profit nation-bound public utility model towards a profit-oriented globalised industry. This process is discussed from the perspective of airline governance culture, a framework which explains the interplay of regulatory, policy, political and cultural factors with airline economic activities, decisions and performance.

The dissertations start with a discussion concerning nationality of airlines and aviation markets and their roots in air law principles, the Chicago Convention, key historical and current air services agreements and national airline licensing rules. This part explains how national airline regulations (airline investment regimes, airline designation policies and airline authorisation laws and policies) have translated into airline dependence on state ownership, restricted access to capital, inefficient structures and specific unproductive business culture.

The following part explains how the nation-bound market framework has been brought out of equilibrium due to liberalisation in air services and airline privatisation, and how this process has destabilised airline governance. The conflicts between aviation policies and air transport regulations as well as between airline corporate goals and business activities are described. This is supplemented with a discussion of airline alliances and other private business solutions to this conflicted environment.

The book presents legal instruments to eliminate national economic affiliations associated with airline ownership and control, comprising community carrier systems, principal place of business designation clauses and liberalisation of national airline investment and establishment regimes. Major national and international developments in this respect are presented. It is proposed that regulatory safeguards against flags of convenience and instruments to ensure a ‘level playing field’ in aviation supplement the airline nationality deregulation. Possible challenges to the recommended liberalization are also outlined, such as legal inconsistencies in the international forum which may arise as a result of the temporary coexistence of competitive and nation-bound regulatory paradigms. Further, some political interests and cultural factors which impede the commercialisation of airline governance culture are deliberated. Lastly, the study gives recommendations as to legal methods, schedules and fora which would be most effective in furthering the airline governance reform.

The concluding part is a debate on economic trends that will prevail in the industry once the airline governance culture is commercialised. It is argued that the resulting worldwide defragmentation of the air transport market and the reorientation on airlines as its key actors will change the nature of competition within the aviation industry and enable true globalisation in this sector.