Saving National Airlines?

Abstract

Air transport is considered a unique industry, one which easily connects different locations around the world yet also carries with it a lot of concern over safety, security, protection of national economies etc... In principle, this is why air transport has long been, and in fact still is, heavily regulated. At a certain point in time air carriage as a business was in principle carried out by governments or under governments' heavy influence. Although air transportation has been considerably liberalised over the last three decades, there are still certain relics of the past. This includes air carriers who are either government owned or controlled, which means that the government indirectly participates in the operation of air transport in a regular open market. This article describes where national airlines come from, why they tend to fail when operating in open market conditions, and what kind of measures the governments concerned have implemented to try and save them when they fail. The paper then reflects on the extent to which it makes sense to save national airlines, at what cost, and how doing so affects the open air transport market. The situation and developments over the last decade at Czech Airlines, the Czech flag carrier is described as a case study.