World Tendences of Civil Aviation Development And

141 ISSN 1648-4142 print / ISSN 1648-3480 online TRANSPORT www.transport.vtu.lt TRANSPORT – 2006, Vol XXI, No 2, 141–147 WORLD TENDENCES OF CIVIL AVIATION DEVELOPMENT AND THE ENLARGEMENT OF THE LITHUANIAN CIVIL AVIATION Jonas Butkevičius1, Aldona Jarašūnienė2 Department of Transport Management, Vilnius Gediminas Technical University, Plytinės g. 27, LT-10105 Vilnius, Lithuania. E-mail: 1 [email protected], 2 [email protected] Received 12 December 2005, accepted 28 March 2006 Abstract. The article deals with global trends in civil aviation, such as: liberalisation of aviation market, globalisation of airlines, privatisation of airlines and invasion of low cost airlines into the market. Also the influence of these trends on the Lithuanian civil aviation activities has been defined. The Lithuanian civil aviation activities have been analysed: activities of international airports, passenger and cargo carriers, passenger routes and passenger flows, transportation market and airplane fleet. The problems of the Lithuanian civil aviation activities have been identified and suggestions for the development of the Lithuanian civil aviation activities have been proposed. Keywords: civil aviation, airlines, airplane, airport, terminal, passenger flow, cargo, development, liberalisation, globalisation, and privatisation. 1. Introduction The process of liberalisation of air transport in Europe started during the adjustment of legal acts Civil aviation plays an important role in the devel- regulating this field of activity. The European opment of the world economy. 1,6 milliard of passen- Community’s legal measures, which consequently en- gers are carried by air transport yearly. For 2010 the forced the stages of liberalisation of aviation market, flow of 2,5 milliard of passengers is forecasted in regu- are known as liberalisation packages. Totally there have lar flights. It is prognosticated that in 2010 the turn- been prepared and implemented three such packages. over in air transport sector will reach 1800 milliard of The first package was intended for the USD [1]. About 1,3 million of people work in the Eu- liberalisation of the domestic market of the European ropean air transport sector, and approximately 1 % of Union and for boosting the competitive capacities of GDP of the European Union is generated by this sec- European airlines. The market continued to be regu- tor. In 2015, in European air transport passenger flows lated within certain limits so that smaller airlines are forecasted to make 1,1 milliard of people. should not be destroyed, because otherwise a remain- Therefore it is very important to analyse the glo- ing monopolist would be able again to dictate his own bal trends of civil aviation and to foresee the direc- prices and therefore users would suffer. tions of the Lithuanian civil aviation [1–4]. The second package liberalised services accord- ing to the third and the fourth “traffic rights”, and the 2. Civil aviation development trends fifth “traffic right” was conferred with certain reser- vations. Conditions were defined under which the des- Liberalisation of aviation market ignation of airlines to certain routes could be limited. A principal reason for the liberalisation of avia- Methods of separation of capacities had been de- tion market was the competitive struggle of airlines. signed. Governments of many countries tolerated economic The third package with suggestions on market regulation long before they little by little resigned from liberalisation was prepared in the middle of 1991, and the interference of administrative institutions, and thus adopted by the European Conference of Transport the market became more liberal. Users influenced this Ministers in 1992. Legal acts of the third package es- process as well. sentially liberalised the EU air transport market. Cer- 142 J. Butkevičius, A. Jarašūnienė / TRANSPORT – 2006, Vol XXI, No 2, 141–147 tain remaining restrictions had to be eliminated until and “One World” alliances, namely with “KLM Royal 1 April 1997. Secondary legal acts of the EU defined Dutch Airlines”, “Finnair”, “LOT Polish Airlines”, the order of conferring slots in airports, as well as the “Iberia” airlines. Growing competition of airlines may measures of competition, also relations with non-EU cause the integration of “Lithuanian Airlines” (LAL) member states and flight management control require- to become an integrated member of any of these alli- ments. ances. The main advantage of aviation market liberalisation is the expansion of air transport mar- Privatisation of airlines ket, the attraction of more airlines and opening of new The below methods are most widely applied in routes. Also competition diminished costs of air trans- the global practice of airlines privatisation: port services thus causing the increase of passengers. a) Financial investor. After liberalisation airlines got equal conditions It is best when a company is able to develop and for competition and no limitations for flights, prices implement the strategy by its own efforts. In such case or network routes. Therefore, the struggle for client the company’s long-term strategy, business plans for needs direct competition not only in terms of tariffs, various kinds of activities, calculated investments are but also of such parameters as flight frequency, con- created. venience of arrival and departure time, passenger ser- b) Financial investor + strategic partner (a non- vice quality and network of routes [5–13]. shareholder airline company not purchasing shares). The aim of attracting a strategic partner (airlines) Globalisation of airlines is to benefit from the cooperation, however, the fi- The objective of cost efficiency induced airlines nancial investor, as in the prior case, provides financ- to consolidate into global alliances. The first alliance ing for necessary implementation of programmes re- “Star” appeared only in 1997, and until the end of the lated to the implementation of strategic partnership. year 2000 four more alliances emerged. So the rapid c) Financial investor + strategic partner (a share- ness of this process is impressive. holder airline company purchasing shares). Main alliances of airlines are the following: In this case a strategic partner shares the finan- • “Star” alliance, uniting “United Airlines” (USA), cial risk with a financial investor, and the latter is more “Lufthansa” (Germany), “SAS” (Scandinavia), apt to invest while knowing that the strategic partner “Air Canada” (Canada), “Thai Airways” (Thai- is interested in the development of the company and land), “ACE Nippon Airways” and “ANA” (Ja- in profit seeking. However, in the case when the aim pan), “Air New Zealand” (New Zealand), of a strategic partner is to benefit from the acquired “Mexicana” (Mexico), “LOT” (Poland), “Aus- airlines market positions by using them for this own trian Airlines” (Austria), “Singapore Airlines” good, the profit indices usually are not guaranteed. (Singapore) and “British Midland Int” (United d) Strategic partner (airline being an investor). Kingdom); The main disadvantage is that the main company • the second largest alliance is “One World” (es- is exploited for solving principal problems, if the prob- tablished in 1998), it comprises “American Air- lems occur in the main company. lines” (USA), “British Airways” (United King- Approximately 80 % of 200 most significant world dom), “Qantas” (Australia), “Iberia” (Spain), airline companies have been already privatised. etc.; • “SKY Team” alliance includes “Delta” (USA), 3. Low cost companies coming to the market “Sabena” (Belgium), “Turkish Airlines” (Turkey), “TAP” (Portugal), “Austrian Airlines” (Austria), The USA Company “Southwest Airlines” is a “Aeromexico” (Mexico) and “Aero Peru” (Peru); pioneer of such activities. It delivers services from its • “Wings” alliance comprises “Northwest” (USA), own activity centre Love Field and from the second- “Continental” (USA), “KLM” (Holland), ary airports in Dallas and Texas. It started activities in “Alitalia” (Italy), “Braathens” (Norway), “Kenya the end of the year 1970 when the State regulation in Airways” (Kenya), “American West” (USA) and the air transport market was cancelled in the USA. At “Aces Colombia” (Colombia). present the “Southwest Airlines” carry 65 million of Airlines of these alliances get the proportion of passengers yearly and it is the most profitable airline about 60 % passengers and they carry more than mil- company in the USA. liard passengers yearly. The main activity principles of low cost airlines The Lithuanian airline company “Lietuvos (including those of the “Southwest Airlines” company) avialinijos” – further referred to as “Lithuanian Air- are the following [4]: lines” or LAL – cooperates with members of “Wings” • they operate from secondary airports having J. Butkevičius, A. Jarašūnienė / TRANSPORT – 2006, Vol XXI, No 2, 141–147 143 lower runway fees and less expensive ground han- thousand by regular flights) departed. In 2004 345,9 dling; thousand of passengers (294,8 thousand by regular • rapid turnover in the airports, for example flights) arrived and 300,8 thousand (292,3 thousand “Southwest Airlines” has mastered a 25 minute by regular flights) departed. lasting turnover required for the airplane land- ing, passengers’ disembarking, refuelling, em- Vilnius international airport barking new passengers and taking-off again; It is the main representative airport of Lithuania. • standard airplane fleet – airplanes only of one The capacity of the airport is about 700

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