COMMERCE 4PA3 Lecture Notes - Lecture 3: Canadian Airlines, Wardair, Quebecair
5 Feb 2019
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Document Summary
In a regulated industry, there tends to be limited service, high prices, and low innovation. Firms in this industry face the threat of becoming irrelevant to the global market as other competitors encroach. The regulated environment sets operation and safety standards, restricts ownership, controls prices, and reallocates resources. When the airline industry became deregulated, the customers benefited because they had more options to choose from in terms of quality of service, price, destinations, and flight hours. Companies now had to compete with other companies to outdo each other. An example of this, was the introduction of frequent flyer plans. Deregulation also forced companies to re- structure and change their business strategy to remain competitive (i. e. gains in the purchase and sale of aircraft was now an element of profit and cash flow generation). In terms of the government, they encountered a number of lawsuits and had to bailout airlines.
