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Introduction
The aviation industry can be considered the most complex of the transportation categories due to the number of influencing variables and critical factors involved. These include resources such as aircraft, fuel, spare parts, and agents, governmental and international regulations, laws and bans, logistics, and associated costs. Companies in this field are constantly looking for new tactics and approaches to reduce costs, improve performance, and satisfy customers for whom the lowest prices and timely service are top priorities. Business collaborations in the form of alliances and joint ventures have proven to be effective methods for airlines to facilitate operations and increase profits, with the Oneworld Alliance as an example.
Discussion
Mergers and acquisitions (M&A) are well-known and traditional alternatives to non-equity alliances widely practiced in numerous business areas. These are also present in the aviation industry as they provide participating and merged airline entities with a range of comparative functional and market benefits. There are some reasons why not all commercial aviation organizations transform into M&A and prefer their equivalent in the form of non-entity alliances. The key ones are government regulations, antitrust policies, necessary optimization, and the need to leave previous market actors’ associations.
The information provided about the aviation industry and market indicates that Southwest will have to get rid of its niche player strategy. Deregulation has made the air transportation field more intense, demanding, and favorable to those market actors who operate globally. Moreover, the very recent act of deregulation is a sign that the American government is leaving the patronage and support of this market and industrial sector. Due to their decreasing natural limit, scarcity and prices for critical resources for aviation companies, namely oil and metals, will also go up. Ecological protective measures are becoming more prevalent in economically developed and emerging nations, resulting in significant expenses and higher costs for smaller airline businesses.
It would probably be great for airline organizations to establish their infrastructure and services in any country by going through only legal labor and business character procedures. However, some compelling reasons exist why nations do not allow carriers such an easy pass. These are security considerations, potential global logistical problems, the need for protecting the domestic market and related industries, and the prevention of unhealthy dominance by the strongest companies.
A United States law dating back to 1938 limiting foreign ownership and ownership of the country’s airlines to strictly 25 percent was a forward-thinking and intelligent move. It still allows foreigners to own one-quarter of those, which is significant, but it also prevents the country from being politically, industrially, and economically dependent on non-domestic actors. The current global geopolitical environment is becoming unstable and aggressive again, and one cannot say that this legislative act is an anachronism now.
Conclusion
The aviation industry can indeed be considered critical to the welfare of any country. It provides an opportunity for borderless trade and other forms of economic and political cooperation and interaction. Moreover, airlines offer enormous jobs since these are complex and large structures requiring specialists from many professional areas. Governments should support commercial aviation entities, especially newcomers and those in crisis, for these geopolitical, logistical, and socio-economic reasons.
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