Free Market System in the World Commercial Aviation System

Aviation industry is one of the most flourishing industry in the world today. It is having great

potential for expansion. People now a days are adapting more advanced means of travelling.

According to a CNN travel report, a German immigrant first flew an aircraft 150 feet above the

city of Bridgeport in 1901 and it travelled around half a mile in the air. On 17th December 1903,

Wilbur wright and Orville wright made the successful flights with their designed aircraft Kitty

Hawk. That was the day that lead the foundations of a huge aviation industry.

On January 1, 1914 world’s first passenger airline started its operations, it started service

between St. Petersburg and Tampa, Fla, this service proved very short term and it remained in

operations only for four months. This service served about 3000 passengers in that time. The

ticket price for the first commercial travel was $450, that is equal to about $8500 today.

With the passage of time, commercial aviation became more and more popular, the major

contributing factors were, international trade activities, being the fastest efficient medium of

travel, more innovation and fascination for travelers to travel in the air, the invention of more

advanced technologies and improved level of facilities in air travel.

Today, we can see the airports almost in every country of the world. “According to the Airports

Council International (ACI) World Airport Traffic Report, there are currently 17,678 commercial

airports in the world, in other words those which receive airliners, cargo and business

aircraft.”(“earnest,” n.d.)

Free market concept is common today in every industry, in order to promote competition and

move away from the monopolistic approaches. Free market system is playing important role in
flourishment of aviation industry. Without competition it would have been a system of crab

services, and passengers might have not moved towards these means of travel.

Until 1978, there was great political control in the aviation sector. An airline deregulation act

that was passed in 1978, promoted the free market concept in the aviation sector. The Civil

aeronautics Board (CAB) was the air controlling authority before the introduction of airline

deregulation act. “CAB rules limiting routes and entry and controlling prices meant that airlines

were limited to competing only on food, cabin crew quality, and frequency.”(“Airline

Deregulation,” n.d.)

It brought positive change to air travel industry. It promoted the competition in air travel sector.

As a result, service level improved, and there was considerable reduction in air travel cost. The

prices that were previously high, have fallen dramatically.

“Compared to the 1970s, fares today have fallen by 40 percent, leading to nearly doubling the

number of commercial departures and nearly tripling the number of passengers serviced

annually. Most importantly, these gains have not come at the expense of safety.”(“Pete

SEPP",2018.). This made the air travel the most attractive mode of travelling. And after ADA,

aviation sector improved a lot, it attracted the middle class to air travel, also helped the

government to discontinue subsidies, that were costing to tax payers.

Now there are number of international airlines operating globally, this has brought the healthier

competition, we see today, the Asian, the middle eastern and gulf airlines are dominating the

market. These airlines are operating globally, and having a number of destinations to travel

around the globe. Airlines like, Singapore Airlines, Japan airlines , Emirates, Qatar Airways etc.,

and the airlines like, Cathay, pacific etc. are making huge out of the free market completion. It is
not just providing international air companies to gain from also providing the consumers best

experience in air travel at considerably lower price.

Cartelization is not a good practice and specially for the airline industry. If the industry is

monopolized then it will not just increase the travel cost for the consumers, will also reduce the

market size and will also ruin the service level. Competition is something that drives the industry

in positive direction and provide the opportunity to the companies to gain from opportunities

where these arise.

Free market in global aviation is a cause of increase in market size of the industry. Because of

affordability and efficiency of the mode of travel more and more people are attracted towards

this mode of traveling. It is assumed that market size in commercial aviation will be doubled

within the next 20 years.

“According to the International Air Transport Association (IATA), in 2016 there were a

staggering 3.8 billion air travelers, a number it predicts will balloon to 7.2 billion passengers

by 2035—a near doubling of current levels. Most of this boost in traffic will come from the

Asia-Pacific region (which includes Asia, Australia, and New Zealand), with China set to

overtake the U.S. as the largest aviation market in the world around 2024 and India set to

displace the U.K. for third place around 2025.”(“ERIC", 2017)

As a result of increased activity in aviation sector, there will be huge challenges of

management of such huge demand, with in limited period of time. There will be great need of

more air ports, more air crafts, and staff etc. The free market will be an effective way to

manage such a huge demand. It is the way that will provide quality aviation services. Alone

governments might not be able to manage such a huge demand for air services. Private
operators will have the important role in managing the increased size of the market. It will be a

booster for the global economy.

With every day increase in air travel demand is boosting up air craft production industry.

Currently two major companies are producing commercial air crafts. Boeing and Airbus are the

prominent names that are producing the heavy commercial air-crafts. New job opportunities

are being created resulted from high activity in the aviation sector. Use of new technologies is

making air travel a safer medium of travel. As we see the number of accidents has reduced

considerably and air travel is now considered the safest medium of travel.

Considering the positive factors and future trends in air travel demand, we can say that, free

market system is the best solution to the future aviation demands, it will not just be able to

meet the demand, will also be able to improve the traveler’s experience as well. Number of

airlines is increasing day by day, that is promoting competition in the market, that is also

beneficial for customers. The only challenge remains with the regulators, is to develop the laws

that regulate the aviation sector to keep its functioning smooth and to maintain its repute as the

safest medium of travel. Governments should build the new airports with advanced

technologies to handle the air traffic with advanced technologies to keep operations smooth

and efficient. With increasing demand in aviation sector free market system is the best solution

to deal with increasing commercial sector aviation demands.

 References

40 Years of Airline Deregulation Prove the Free Market Still Works for Consumers. (n.d.).

Retrieved April 23, 2019, from Morning Consult website:

https://morningconsult.com/opinions/40-years-of-airline-deregulation-prove-the-free-

market-still-works-for-consumers/

Airline Deregulation. (n.d.). Retrieved April 23, 2019, from Econlib website:

https://www.econlib.org/library/Enc/AirlineDeregulation.html

As Billions More Fly, Here’s How Aviation Could Evolve. (2017, June 20). Retrieved April 23,

2019, from National Geographic website:

https://www.nationalgeographic.com/environment/urban-expeditions/transportation/air-

travel-fuel-emissions-environment/

How many commercial airports are there in the world? (n.d.). Retrieved April 23, 2019, from

https://www.aeronewstv.com/en/lifestyle/in-your-opinion/2954-how-many-commercial-

airports-are-there-in-the-world.html