SOCIAL SCIENCES

Essay Writing

Essay Writing

Introduction

The airline industry had to face serious issues since July 2008 when the prices of oil per barrel increased to $147, thus, there was a great decrease in demand in all the airlines. This paper looks at two airlines which were located in Singapore and China. We will examine the political and economic changes that these airlines had to face since 2008 and how airlines in different regions faced them.Further, we look at how both these airline were able to demonstrate the changes and steer their way despite the changes.

Discussion

The airline industry in Singapore grew to a large extent and generated around $6.5 billion in revenues. The growth rate of Singapore is around 12% and comparatively, the Chinese industries grew by 9% since 2008. Since the year 2008, the airline industries have struggles due to high fuel prices, decrease in consumer demand and the impact of credit issues due to bank liquidity. There has been a great setback on many of the airlines and around thirty amongst them got bankrupted since price hike. They include Silverjet and XL in UK. The prices decreased to aextent in the last quarter of 2008 and there were serious impacts on other relative industries like the suppliers of the B/E Aerospace who supplied plane seats. Singapore stayed strong in the midst of the crisis due to strong supplier power and present of global monopoly of Boeing and Airbus. The airline industry has been deregulated in Singapore which makes easy for the new entrants to get in the industry. The challenges for the new entrants is that due to bureaucracy and high financial expenditure of setting up an airline becomes a deterrent for many who want to enter in the market.

The Economic and Political Changes

The Congress had passed the Airline Deregulation Act in 1978 and at that time many airlines used to enter and exit the market.Many may contest the idea that free market was a better way in the air transportation, the Federal Government felt that deregulation of this market was necessary. The liberalization process of air traffic control in Singapore has been greatly applauded in a time when rising costs and decline in profits have hit the industry. Previously, the policies of protectionist were mainly beneficial for the industry and society. The United Kingdom and Singapore airlines signed an agreement in 2007 to allow full skies between the two countries.This way airline from Singapore can fly from anywhere in United Kingdom to any place and vice versa for the flights in United Kingdom. Thus, this was a model agreement which can have a positive impact and others may follow suit in the industry. The liberalization of the international markets has provided many benefits for the passengers as well as has contributed a great deal in the wider economy. Singapore has followed a liberal policy and has signed 90 service agreements with other nations and 20 are open skied agreements. The countries in which open skies agreement was not achieved, a liberal ...