International Business Case Study Example | Topics and Well Written Essays - 3000 words

International Business - Case Study Example The immediate industry response to deregulation was increased competition in the market as new entrants sought to take advantage of the new investment opportunities. Further, increased competition was perceived as having a negative outcome for the industry particularly as price wars resulted in reduced prices. The low cost of travel, although favorable to consumers, resulted in increased pressures on the bottom lines for the companies operating in the airline industry. Government ownership provided protection and capacity enhancement to national carriers to ensure they offered services in targeted markets. However, this protection from home countries does not exist, which implies the adoption of private arrangement between companies is important for expansion and improvement of quality of services (Forsyth, Button and Nijkamp, 2002). Additionally, global airline networks results in reduction of competition in the market. Strategic alliances between airline companies allow partners to overcome various entry-level restrictions imposed by authorities on markets and routes. Motivation for global is as a result of provisions in Article 1 of the Paris Convention of 1919 which grants power over regulatory activities pertaining to air traffic to authority under which the airspace falls (Cento, 2008). Countries have been granted exclusive power to control airspace to the extent that they see fit depending on their internal perception of issues such as economic contribution and security matters. A sovereign state, therefore, has all the right to decline request for an airline company to operate from their territory. Forming global alliances is an effective strategy for airline companies to overcoming challenges that result from this legal impediment top their operations. Therefore, partners involved in this arrangement will have