Global geographic reach: A Delphi study into the future of the airline industry

Abstract

The global airline industry is dynamic and complex, with historically low profitability and a seemingly paradoxical yet symbiotic relationship with globalisation. This study conducts a strategic industry level analysis into its likely future over the next decade, with protectionism and liberalisation at its zenith. A plethora of competitive drivers, shapers, factors and forces unite to create the contemporary industry's architecture, and to influence its future prospects. This study carefully considered the impact and role played by both geographical location (home base/nationality), and international relations (bilateralism/multilateralism), which in large measure determine where and how airlines can extend their global geographic reach. Few industries are so profoundly shaped by geographical location as is the airline industry, while political decisions embedded in international treaties such as air service agreements (ASAs), and enshrined in the bilateral system, continue to hamper multilateral efforts in many parts of the world. The interests of states remain paramount in the industry. A five stage mixed-method Delphi study was conducted. Key findings include an evident level of participant pragmatism based on situational context, not ideologically driven conceptualisations. Underpinning participants’ views, on many occasions, were their geographical region/s of best industry knowledge. Thus, high level knowledge of a particular region shaped and influenced what participants thought was possible elsewhere. The future for major European flag carriers and the big three global alliances was characterised as solid overall, even as equity investments and bilateral partnerships grow. Europe was seen as a prime example of future regional liberalisation, but more as architype than driver; the North Atlantic less so. According to most study experts, the three major Gulf carriers are not headed for global dominance, but they will continue to be a significant part of the industry in future. Meanwhile, protectionism in Asia, particularly China, will strengthen in future, while India's future was seen as mostly too challenging to accurately forecast at present. The global airline industry will not witness liberalisation beyond what its national building blocks and bilateral structural realities are able to absorb. Even so, this will not stifle industry expansion. The industry's future appears set for growth into hitherto underdeveloped countries and regions; a trajectory that will continue over the next decade and beyond.