Think Tank VI Ethical Issues in Collaboration in the Aviation Industry Ravi Ravinder School of Leisure Sport and Tourism University of Technology Sydney

Background  Ethics at the molar level (Solomon, 1993) Internal management practices External (market-related)  “cartels,  abuses of a dominant position,  abuse of buying power and/or attempts to monopolize,  anti-competitive mergers and acquisitions” (Souty, 2005)

An Ethics-based perspective  Going beyond disciplinary perspectives ‘value-full’ rather than ‘value-free’ science (Macbeth, 2005) Existing paradigms imply a power imbalance Needs to be proactive rather than reactive More focus on contemporary life, rather than nostalgia

A Telos  Not just what is right or wrong  But what will it achieve?  And for whom? customers, employees, owners, suppliers, competitors and communities  Telos proposed for hotels, sustainable tourism and hotels  Aviation? Tribe, 2002, Jamal, 2004

A Proposed Telos for Aviation (1)  Sufficient, rather than maximum profitability, which benefits shareholders, their employees, and suppliers and reinforces the firm’s long- term sustainability,  Provision of safe, efficient and comfortable transport services, (This principle is currently being well- served within the aviation industry),

A Proposed Telos for Aviation (2)  Governments’ intervention in aviation matters to be dictated by its electoral mandate and defined set of principles (derived from this mandate, rather than ideology), only safety and security is truly in the ‘national interest’ in a liberalized market,  Provision of the critical link facilitating tourism flows between an origin and a destination, thereby offering consumer choice at the origin, and enhancing tourism-specific economic activity and employment at both ends

Discussion Three subsets of collaborative networks  Between airlines and airports,  Between governments in Bilateral Air Service Agreements, and  Between two or more airlines in bilateral or multi-lateral alliances.

Airlines and Airports  Both are large, a capital-intensive, large employers and crucial to tourism flows  Both only recently privatised  Issues: Preferential Deals Airline’s capital in airport devpt Airport access to airline competitors Low-cost terminals Local community involvement

Bilateral Air Service Agreements  Negotiated by govts, but airlines are active lobbyists  Inherently anti-competitive But govts are equally hypocritical about it  The cases: Trans-Atlantic Trans-Pacific (Australia – USA) Australia inbound Effects

Airline Alliances (1) Types of Alliances  Single route  Across Network  Sharing Resources  Multi-airline alliances  Partial Equity involvement  Mergers, takeovers Rationale  Cost-benefit v Customer Demand  Economies of Scale, Density, Scope  Distribution,  Promotion  Branding

Airline Alliances (2) Effects  Alliances a necessity? For individual airlines For communities / stakeholders  Acceptable market behaviour  No major ‘ethical’ issues except for Foreign ownership  Existing regulation is working?

A Proposed Telos for Aviation  Sufficient, rather than maximum profitability, which benefits shareholders, their employees, and suppliers and reinforces the firm’s long-term sustainability,  Provision of safe, efficient and comfortable transport services, (This principle is currently being well-served within the aviation industry),  Governments’ intervention in aviation matters to be dictated by its electoral mandate and defined set of principles (derived from this mandate, rather than ideology), only safety and security is truly in the ‘national interest’ in a liberalized market,  Provision of the critical link facilitating tourism flows between an origin and a destination, thereby offering consumer choice at the origin, and enhancing tourism-specific economic activity and employment at both ends

Thank you Gracias