The practices is the civil aviation industry. It

The globalization has led to the growth ofCompetition in recent years, especially since the 1990s.

The growth has been interms of both geographical regions and as well as in the range of economicactivities now subject to competition law. In India, Competition Act was passedon December 2002 and came into effect on 13th January 2003. The Civilaviation industry is one such sector which is most effected by anticompetitivepractices. It also plays an integral role in development of the economy of ourcountry. Competition in markets promotes efficiency, encouragesinnovation, improves quality, boosts choices and reduces cost. As suchcompetition ensures freedom of trade and prevents the abuse of economic powerand also promotes economic growth which in turn leads to political stability.It is also driving force for building up the competitiveness of the domesticindustry as business that do not face competition at home are less likely to beglobally competitive.

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1One of the most affected sectors by anticompetitive practices is the civilaviation industry. It plays an integral role in development of economy. The airpassenger transport industry has been one of the major drivers behind rapidglobalization of the world businesses and the consequent shortening of thedistances on the planet. There are certain factors concerned to the airlineindustry that are anti-competitive such as ‘ Frequent Flyer Programs’ and ‘CodeSharing Agreement’ that are operated by various airlines and which tend torestrain competition in the market. In order to gain efficiency hub and spokenetworks are formed wherein the traffic feed was brought in to the centralplace (the hub) from other areas in the vicinity of the hub (the spokes). Thishub and spoke network is prevalent today all over the world. Hub-and-spokesrefers to the network of bilateral alliances between United States and otherindividual East Asian countries United States acts as a hub and Asian countriessuch as South Korea, Taiwan and Japan fall under the category of spokes.

Globally, New York, London, Amsterdam, Dubai, Singapore and Tokyo are the bestexamples of the hub wherein passengers flow in from all corners of the regionand again take off for their respective destinations.2Through FFPs, an airline strengthens the airlines market position and alsotends to fetter competition in the market by making it difficult for newentrants to enter the market and expand. Thus air line industry has been one ofthe major drivers behind rapid globalization of the world business and hasconsequently shortened the distance on the planet. “If you are a global company and India is not on your map, then you havemissed the bus”3.2 Concept of Aviation AllianceAnairline alliance is an agreement between two or more airlines to cooperate on asubstantial level. These alliances provide a network of connectivity andconvenience for international passengers and international packages.  Alliances also provide convenient marketingbranding to facilitate travelers making inter-airline code share connections,frequent flyer programmes etc within countries.

3 Airlines alliance result inbenefits for passengers like lower prices due to reduced costs, a wider choiceof flights, destinations and rewards due to reduced costs and more streamlinedtransfers. Most of the largest passenger airlines worldwide are members of oneof three major alliances namely, One World, Star Alliance, Sky Team. Anairline alliance not only benefits the passengers through an extended networkbut may also result in a bane for the passengers as they may result in creatinga monopoly leading to increase in prices and deficiency of services.

Theability of an airline to join global alliance is often restricted byregulations and laws of the country of origin of that airline which may delayits joining the alliance. Sometimes the landing rights are owned by thegovernment of the country in which their head office is situated. Hence, if anairline mergers with a foreign airline, it loses its national identity and thusexisting agreements may be declared void by the country which objects to themerger.            Now a day’s code sharing is popularamong the Indian carriers where the domestic carriers can fly overseas oncethey complete five years of domestic operations in addition to other mandatoryrequirements and legal liabilities which tend to increase and becomecomplicated. India is a party to Guadalajara Convention, which was adopted inthe year 1961. The Convention ensures that a carrier performing carriagewithout having entered into a contract with the passenger will be liableaccording to the Warsaw Convention as modified by the Guadalajara Convention.This Convention has also made a distinction between a contracting and an actualcarrier.

            Code sharing involves one airlineadvertizing and selling the services of another as its own and thetransportation of passengers and cargo on an airline other than the oneidentified in the travel documents. The carrier performing the flight isreferred to as the operating carrier while the other airline is identified asmarketing or contractual carrier. Code sharing agreements enable airlines to increasetheir traffic and revenues thereby profits, network size, service frequency,offering more destinations through its frequent flyer programmes andcoordination of operations. For Example,in India, Jet Airways has a code share agreement with Brussels Airlines inorder to give its passengers wider destinations in Europe to choose from.Similarly, Air India has a code-sharing agreement with airlines like Lufthansaand Singapore Airlines.4            Frequent flyer programmes on theother hand, is a loyalty programme offered by all airlines in the world today.Under this, members earn frequent flyer miles or points depending on thedistance and class of travel flown.

These credited miles may then be redeemedfor air travel or even on partner airlines of the FFP of which the flyer is amember or on free stays with partner hotels, free car rentals with car rentalpartners among other several benefits like discounts vouchers, dining etcdepending upon the points available in the member’s account and points requiredfor redemption. 1 G.RBhatia, “Combating Cartel in Markets-Issues and Challenges”, available at www.cci.gov.

in,last visited on 8th June 2015 at 8pm.2Cha V.D, “Powerplay:Origins of the U.S. Alliance System in Asia”, International Security(2010) , 34(3) :p.

158-1963 Fernandez de la Torre, Pablo E. “Airline Alliance: legal perspective”. [email protected] SandraArnoult, ” Piedmont’s Roots Run Deep” ,(www.atwonline.com)

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