TRANSPORTATION Get a move on!

The Transportation Sector  Includes three industries:  1) Airline Industry,  2) the surface travel industries and  3) The cruise and marine industries

The Transportation Sector  The transportation industry is different from almost any other industry because it operates in a very regulated environment

Regulation?  What is regulation?  Regulation is when the governments own, or impose conditions or restrictions on an industry.

Regulation?  Why do such a thing?  Lets take a trip back in time to America’s golden age of selfish profiteering!

Back in the day…  America used to have extremely unregulated businesses.  Everyone was in it for themselves and many people believed the competition between companies would force prices to stay reasonable.

Back in the day…  But every now and then one company would get ahead.  They would use that better position to either buy out other companies, or destroy them by taking all their business.

Back in the day  This left us with two dangerous types of companies:  1) The monopoly – a company that controls an entire product or service  2) A Trust – a group of companies controlled by a central authority whose purpose is to create a monopoly.

Back in the day…  One example of this was the railroad industry, which was the most important form of transportation in America.  Each railroad company had a near monopoly over transportation in their area.

Back in the day…  The public was becoming concerned about the power the railroads had over their lives.  If they didn’t like what the companies were doing they could walk to the next state for all anyone cared.

Back in the day…  Many railroad companies would charge different rates for different people.  Sometimes the rate charges made sense; sometimes they just didn’t like your face. Either way, there was nothing you could do about it.

Back in the day…  The US government passed the Interstate Commerce Act in 1887 requiring railroads to post their prices for everyone to see.  They also had to give public notice if they planned to change anything.

How does this relate to today?  In Canada, public transportation accounts for almost half of tourism spending.  Everything the transportations companies do is regulated

What is regulated?  Entry- Would you like to provide a service? Get permission  Exit- Would you like to stop providing a service? Get permission  Rates- Want to raise/lower your rates? Get permission

What is regulated?  Freedom to manage- Would you like to change your business around so you can provide a better service and remain competitive? Get permission  Mergers and Acquisitions: Do you and your friend want to merge companies to create a better company? Get permission.

Different forms of Regulation  Some countries regulate simply by telling companies what they can or cannot do.  Other areas regulate by creating government companies or encouraging smaller businesses that can offer better prices.

What do you think?  Which form of regulation do you think is better?  Why?

TRANSPORTATION!