Airline Industry Overview Quiz
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Questions and Answers

What is the URL for the ACI website?

  • https://www.acme.com
  • https://www.ec.europa.eu/transport/modes/air/single_european_sky_en
  • https://aci.aero/ (correct)
  • https://www.iata.org/publications/optin/Pages/login.aspx

    • The publication 'The Airline Business in the 21st Century' is authored by John G. Wensveen.

    False

    Name one reference that discusses the deregulation of the airline industry.

    The Remaining Role for Government Policy in the Deregulated Airline Industry

    The publication by ACI and Boeing discusses airline strategies and __________.

    <p>business models</p> Signup and view all the answers

    Match the authors or organizations with their respective works or roles:

    <p>Rigas Doganis = The Airline Business in the 21st Century John G. Wensveen = Air Transportation: A Management Perspective European Commission = Single European Sky Initiative ACI = Airports Council International</p> Signup and view all the answers

    What significant change occurred in the aviation industry starting from 1978?

    <p>Liberalisation of air transport</p> Signup and view all the answers

    The Air Mail Act of 1920 established regular air mail routes primarily for passenger transport.

    <p>False</p> Signup and view all the answers

    What government department initially conducted air mail service in the United States during the formative period?

    <p>Post Office Department</p> Signup and view all the answers

    The _____ Air Mail Act in 1934 allowed tendering of mail to the private sector, significantly impacting the industry.

    <p>Air Mail</p> Signup and view all the answers

    Match the following periods with the corresponding events:

    <p>1918-1938 = Formative Period 1938-1958 = Growth Years 1958-1978 = Maturity: Jets arrive 1978-1991 = Liberalisation</p> Signup and view all the answers

    Which act established contracts for airlines and aircraft manufacturers during the formative period?

    <p>Air Mail Act of 1920</p> Signup and view all the answers

    The 'Open Skies' policy allows unrestricted international air transport.

    <p>True</p> Signup and view all the answers

    What type of air routes primarily characterized the aviation industry from 1918 to 1938?

    <p>Regular air mail routes</p> Signup and view all the answers

    What was a significant outcome of the new bilateral agreements between the US and countries like Singapore and Thailand during 1978-1980?

    <p>Emergence of low cost carriers</p> Signup and view all the answers

    The European bilateral Air Service Agreements (ASAs) imposed strict controls on the points that could be served by airlines.

    <p>False</p> Signup and view all the answers

    What concept calls for the liberalization of the rules and regulations of the international aviation industry?

    <p>Open Skies</p> Signup and view all the answers

    The first “Open Skies” agreement was signed between the Dutch and _____ government in September 1992.

    <p>US</p> Signup and view all the answers

    Match the following aviation policies or agreements with their key features:

    <p>Bilateral Agreements = Removed controls on route access Open Skies = Unlimited market access and traffic rights EU internal market change = Free flight operations between EU countries Low Cost Carriers = Created new air travel markets</p> Signup and view all the answers

    Which of the following was NOT an element of the 'Open Skies' agreement?

    <p>Strict control over tariffs</p> Signup and view all the answers

    The emergence of low cost carriers was a result of European liberalisation.

    <p>True</p> Signup and view all the answers

    What key benefit did U.S. airlines experience following the implementation of the U.S.-EU Open Skies agreement?

    <p>Boosted service to Heathrow</p> Signup and view all the answers

    Which freedom allows an airline to fly over another nation's territory without landing?

    <p>1st Freedom</p> Signup and view all the answers

    The 4th Freedom allows a carrier to pick up commercial traffic in a foreign nation and bring them back to their home country.

    <p>True</p> Signup and view all the answers

    What is the main purpose of the 2nd Freedom?

    <p>Technical stop for refueling or crew change</p> Signup and view all the answers

    The 5th Freedom allows a carrier to pick up passengers in a second country and fly them to a _____ country.

    <p>third</p> Signup and view all the answers

    Match the following freedoms with their corresponding rights:

    <p>1st Freedom = Fly over another nation's territory without landing 2nd Freedom = Land for technical stop (refueling/crew change) 3rd Freedom = Drop off traffic from home to foreign country 4th Freedom = Pick up traffic in foreign country to home</p> Signup and view all the answers

    Which example illustrates the 6th Freedom?

    <p>SQ flying from Sydney to London via Singapore</p> Signup and view all the answers

    The 7th Freedom allows an airline to fly traffic between two nations without involving its home country.

    <p>True</p> Signup and view all the answers

    What rights must country B grant to the carrier from home country for the 5th Freedom?

    <p>Beyond-point rights</p> Signup and view all the answers

    What was a significant reason why airlines suffered before 1978?

    <p>Restrictions on entry to market</p> Signup and view all the answers

    The Airline Deregulation Act aimed to establish more restrictive practices for airlines.

    <p>False</p> Signup and view all the answers

    What did the US government aim to eliminate regarding unfair competitive practices?

    <p>Unfair competitive practices faced by US airlines abroad</p> Signup and view all the answers

    In traditional air service agreements, only one airline was allowed to fly direct between the two countries, unless they were _____ owned and effectively controlled.

    <p>substantially</p> Signup and view all the answers

    Match the following objectives of the Airline Deregulation Act with their descriptions:

    <p>Greater opportunities for competitive pricing = Encouraging lower fares for consumers Elimination of route operating rights restrictions = Allowing more flexibility for airlines Multiple designation of US airlines = Permitting more than one airline to operate international routes Authorization of more US cities as international gateways = Increasing access points for foreign airlines</p> Signup and view all the answers

    Which of the following was NOT an aim of the US government in renegotiating bilateral air service agreements?

    <p>Increasing regulations on capacity</p> Signup and view all the answers

    The liberalization period lasted from 1978 to 1991.

    <p>True</p> Signup and view all the answers

    Name one impact of insufficient economic regulation on airlines before 1978.

    <p>Poor performance of airlines</p> Signup and view all the answers

    What is cabotage in the context of airline operations?

    <p>Carrying foreign domestic traffic by foreign carriers</p> Signup and view all the answers

    The 8th Freedom of the Air allows for foreign carriers to freely transport passengers between two points within a foreign nation.

    <p>True</p> Signup and view all the answers

    What does the International Civil Aviation Organisation (ICAO) serve as?

    <p>A global forum for civil aviation</p> Signup and view all the answers

    The 9th Freedom is also known as _____ cabotage.

    <p>full</p> Signup and view all the answers

    Which of the following statements is true regarding airline cabotage?

    <p>It is often reserved for national carriers.</p> Signup and view all the answers

    Match the following airline freedoms with their descriptions:

    <p>8th Freedom = Carrying traffic between two points in a foreign nation as part of a service from the home country 9th Freedom = Carrying traffic solely between two points in a foreign country Cabotage rights = Reserved for national carriers</p> Signup and view all the answers

    Give an example of an airline that utilizes the 9th Freedom.

    <p>Ryanair</p> Signup and view all the answers

    Which organization focuses on international air transport issues?

    <p>International Air Transport Association (IATA)</p> Signup and view all the answers

    Study Notes

    Course Overview

    • The course covers the aviation industry, with specific focus on international aviation.
    • Topics include: Introduction, International Aviation, The Airline Business, The Airport, Aircraft Manufacturers, Air Freight, Aviation and the Environment, and Future Issues.

    Content

    • The lecture notes cover the historical perspective, from regulation towards deregulation (open skies).
    • This includes freedoms of the air and international organisations.

    The History Perspective

    • 1918-1938: The formative period, primarily focused on air mail routes in the US, initially handled by the Postal Service. Contract airmail routes were established, connecting cities and facilitating transcontinental travel. The Air Mail Act of 1920 granted contracts to both airlines and aircraft manufacturers.
    • 1938-1958: The growth years. Jets arrived.
    • 1958-1978: Maturity, with the arrival of jets.
    • 1978-1991: Liberalisation. Airlines suffered due to regulations on; entry to market, Traditional Air Service Agreement (ASA), exclusive rights to designated airlines, nationality clause, schedule of routes, determination of passenger fares and cargo tariffs, capacity controls in air transport, and insufficient capacity led to higher fares.
    • 1992 onwards: Towards "Open Skies". An international policy to liberalize rules and regulations of the international aviation industry, create a free-market.
    • The 1918 to 1938 Period: There were shorter feeder routes connecting to transcontinental Columbia routes. Air Mail Act of 1934. Resulting from the act was more even distribution of mail business, lower mail rates, and forced companies and manufacturers to pay more attention to passenger air transport. Led to separation of airlines from manufacturers.

    1918-1938: Formative Period (ctd)

    • Air Mail Act of 1934. US government transferred mail service to the private sector, creating a more competitive bidding environment for one-year contracts.
    • The result was a more equitable distribution of mail business and lower mail rates, necessitating a stronger focus on passenger air transport development.
    • There was a separation of airlines from aircraft manufacturers.
    • Boeing 247 and DC-1 (Donald Douglas) made their first flights in 1933. Airlines started large aircraft purchases. The first airway traffic control center was formed in Newark, New Jersey, in 1935.

    1938-1958: The Growth Years

    • Civil Aeronautics Act of 1938 led to certifying flight personnel (navigators, engineers, and radio operators), focusing on safety,
    • This oversaw passenger, freight, and mail rates, schedules, and regulations for financial arrangements of airlines.
    • Technology advanced rapidly (high-performance, longer-range aircraft, e.g., DC-4).
    • Air freight became a viable industry with independent freight airlines.

    1958-1978: Maturity

    • Jet era (e.g., B-707, DC-9). Air traffic control became mandatory, leading to further improvements. Short-range B737-100 was certified in 1967.
    • Boeing B747-100 certification in 1969, enabled low-cost mass travel, twin-aisle, mixed-class layouts, and introduced the concept of "wide-body" commercial aircraft.
    • Improvements in technology include flight recorders, weather radar, and terrain-avoidance systems, leading to safer air travel.

    1978-1991: Liberalization (ctd)

    • Before 1978, regulations restricted airlines, limiting the number of airlines operating between nations.

    1978-1991: Liberalization (ctd) (more details)

    • US deregulation efforts led to reductions in regulatory controls, aiming to achieve competitive pricing, eliminate restrictions on capacity, frequency and route operating rights. This included elimination of unfair competitive practices and allowing more US cities to be international gateways. Increased air cargo competition was also sought.
    • Deregulation was accomplished by re-negotiating bilateral ASAs to achieve these objectives.

    1978-1991: Liberalization (ctd) (even more specifics).

    • Regulations before 1978 restricted airlines' entry into new markets, particularly through Traditional Air Service Agreements (ASA) which granted exclusive rights to designated airlines based on nationality clause, schedule of routes limitations, and determination of fares and cargo tariffs. Airlines suffered due to these limitations, despite the growth in traffic. There also were capacity control issues affecting markets.

    1992 Towards "Open Skies"

    • Open Skies is an international policy aiming to liberalize rules and regulations of international commercial aviation, creating a free-market environment for the airline industry.
    • Open Skies policies are closely linked to global airline globalization by allowing unrestricted market access for carriers.
    • In September 1992, the Dutch and US governments signed the first "Open Skies" agreement. This agreement, among others, led to increased service from US airlines to Heathrow, demonstrating benefits from the Open Skies policy.

    1992-2000: Towards Open Skies

    • The EU's creation of a single market led to the liberalization of intra-EU air travel, enabling unlimited passenger rights between EU countries.
    • In Europe, this resulted in more intra-European traffic, free mobility, competition, lower fares, and more connections and destinations.
    • The deregulation effort reduced fares and stimulated air traffic.

    Future of the Skies

    • After deregulation and liberalization of the US and Europe, ASEAN countries are aiming for full liberalization, similar to what was accomplished in the US and EU which opened up markets for numerous new services. This is currently being done for the ASEAN region.

    Freedoms of the Air

    • The Chicago Convention of 1944 laid out the fundamental rules of air transportation regulation (Freedoms of the Air). These are widely considered as building blocks for the international flight networks.
    • There are 5 basic freedoms. Some are more recognized than others. Additionally, there are two that are widely regulated, and two that are hardly accepted.

    Freedoms of the Air (details)

    • 1st Freedom: Allowing flights OVER a country's territory without landing.
    • 2nd Freedom: Allowing a carrier to land within a foreign nation for non-traffic-related purposes (e.g., technical stops for refueling or crew changes).
    • 3rd Freedom: Allowing a carrier to drop off passengers and cargo from its home country to a different nation.
    • 4th Freedom: Allowing a carrier to pick up passengers and cargo from a foreign nation and transport them back to the home country.
    • 5th Freedom: Allowing a carrier to land in a foreign country, pick up passengers, and fly onward to a third country.
    • 6th Freedom: Permitting a carrier to carry commercial traffic through its home country to a third country.
    • 7th Freedom: Allowing a carrier to transport passengers and cargo from one country to another without transiting through the carrier's home country. This freedom is rarely used for commercial airlines.
    • 8th Freedom: Allows cabotage, the right for a carrier to pick up or drop off passengers in another country's territory as part of a service from its home country.
    • 9th Freedom: Provides for standalone cabotage, enabling a carrier of one country to exclusively service flights and traffic within a foreign country.

    International Organizations

    • ICAO (International Civil Aviation Organization) is involved in the global forum for civil aviation. It's a specialized UN agency comprising 193 contracting states, with a governing council of 36 member states. It codifies the principles, promotes planning, and ensures safe and orderly development of international air transport. Safety, security, environmental protection, efficiency, and rule of law are ICAO strategic objectives.
    • IATA (International Air Transport Association) is an international association of airlines, headquartered in Havana, Cuba, with over 290 members representing 82% of the world's air traffic from more than 120 countries. It is focused on representing airline interests, leading industry-wide programs, and improving the global airline network and smoother passenger and cargo movement.
    • ACI (Airport Council International) acts as a global trade representative representing the interests of the world's airports, focusing on safety, security, environment, efficiency, customer service, and economic development. Created in 1991, it has 5 regions: Africa, Asia-Pacific, Europe, Latin America-Caribbean, and North America.

    Exercises

    • There were exercises related to finding flight routes based on numbers (SQ 26, KL 888, U2 5777, U2 1192 and VA 218), and related them to air freedoms.

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