As indicated earlier, airline deregulation acted as a direct opener to further growth and development in the system. However it is clear that even with the basic understanding of the need to boost globalization through liberalization of he industry, most of the airlines globally have strong state outlay that prevents their aggressiveness in the market place. Immediately, after the passing of the Airline deregulation Act in 1978, the impacts were felt faster than it was expected. Notably, this deregulation served as an opener for the global airlines that followed the same model.
It was particularly mimicked in Latin America, Asia and Europe. Hub and spoke networks were assumed by the airlines as competition set in. Due to their unregulated systems, the airlines were able to maximize the number of connecting city pairs in their operations. Figure. 1 Indication of hub-and-spoke operation system (Adopted from Clifford and Clifford, 2008) The modern system assisted the airlines to maximize the flights with greater efficiency. To add to that, most of the airlines had to adjust the travel prices due to the created explosive competition.
Economists argue that it was during this period that bulk of the US interstate investment was realized. As a result to the adjustment in the air prices, travel demand for tourist purposes and business consideration hiked attracted more entrants into the market as major reorganizations through mergers were established. In 1990s, the airline re-branded from USAir to US Airways, the name it has retained to date. To add to that, it established modern larger air buses that gave consumers better comfort and satisfaction (Bijan et al, 2008, pp. 29-31, Marc et al, 2007. pp. 81-85).
Towards open skies development According to Gopinth (2008, pp. 36-37), the global development in the airline industry is a pointer of development taking place in the different countries. Gopinth continues to say that the overall system is depicted by the global development in major sectors that directly or indirectly relate to the airline business. Tourism and other service business infrastructural development has vastly grown due to the global interlink.
Open Skies are bilateral agreements between various states that are aimed at giving airlines the right to operate within their major airports. Since 1978, US government has open skies agreement with over sixty countries globally. Kenneth (2004, pp. 47-52) notes that the open skies is one of the greatest boosts to globalization as it breaks the traditional boundaries that had hindered the overall regional and global development. US Airways took the advantage of the open skies between the country and others by launching long flights to destinations outside the country.
Open skies has been credited for the long time market share of the airline business by the US and EU Airlines globally. However, these agreement have failed to break the long time investment demands which prevents external investors from owning and establishing investments beyond various capacities in US and EU (World Trade Organization, 2005, pp. 15-16). Other open skies agreement include Australia and New Zealand Single Aviation Market (SAM), which opened the overall airlines ownership and established unlimited frequencies for Trans-Tasman services.
However, it remained silent to other airlines especially from the third world countries. Notably, most of Economic Agreements and unions have agreement on open skies. EU, ASEAN, and the Gulf Cooperation Countries allow their airlines to operate between their member countries cities. Kenneth (2004, pp. 75-77) and Lawrence (2004,pp. 102) adds that currently, negotiations have shifted from being a country-to-country consideration to economic unions demands for better negotiating capacities.