The paper 'The European Commission Prohibited the Takeover of Aer Lingus by Ryanair" is a good example of a business case study. There has been a concern of modeling competitive relationships within the passenger air transport industry (Gaggero, 2010). The main impetus of this measure is the increasing significance of deregulation and hence a competitive market among the passenger air transport network. Network industries such as the aviation and transport industries are considerably influenced by competition and regulation (Giorgio, 2007). In order to ensure fair and healthy competition in the air transport industry, a number of regulations have been adopted.
These regulations are also in such a way as to protect passenger rights. The industry must balance public values and private considerations (Paul, 2004). Monopolistic networks are regulated through liberalization. British Airways initiated a takeover bid of BMI, which received opposition from the European Union in 2007. The European Commission prohibited the takeover of Aer Lingus by Ryanair. The Ryanair is a leading flight service provider that uses the internet to market its services. Main Debate The European Commission is responsible for the enforcement and implementation of the EU regulations (Clause and Isabela, 2004).
It conducts surprise inspections, and in the event, a company is found to be doing illegal businesses, which restrict competition, it is fined up to 10% of their annual turnover. According to the European Commission, elimination of a competitor in the Irish airline would result in harmful effects to consumers in a general sense (Clause and Isabela, 2004). This paper is a critical analysis of competition and regulation in the airline industry based on British Airways takeover bid on BMI.
In this stance, a link is established between strategies of the airline business and network of structures and the resulting completion in the divergent models of business structures. This is a highlight of market structure stability and the role played by the completion and regulation policies. The British Airways industry trades as a BMI or British Midland International. The airline is headquartered at the Donington Hall in Castle Donington near East Midland Airport in the United Kingdom. The airline has destinations to Europe, Middle East, Africa and Central Asia from its operational base at London Heathrow Airport.
The BMI is a recognized subsidiary of the IAG. It was bought from the Lufthansa in 2011. Other subsidiaries included the Bmibaby and the BMI Regional. Despite the deregulatory measures from the European Union single market, British Airways intends to merge the BMI into its system. The BMI Group facilitated and boosted flight services remarkably. In the year 2002, for example, a staggering 7.95 million passengers were served. By the year 2005, the number had risen to 10.1 million. The British Airways on-going takeover bid is, therefore, a welcomed idea in this perspective (Lars and Pervez, 2004). There was a complete takeover of BMI by Lufthansa in the year 2009.
This aimed at suspending the loss-making routes thereby adjusting capacity. The measures employed included a fleet reduction of nine aircraft from the main airline fleet among others. Following the regulations and competition, seasonal routes from London Heathrow to Palma and Venice were discontinued unceremoniously. Critically analyzing this restructuring of the BMI system, it turns out that discontinuing some airline will result in the loss of around 600 jobs and more than 10 percent of the airline’ s workforce.
However, it can be stated here with regard that in the year 2010 flight numbers were reduced from six to four between Dublin and London. This was attributed to the poor economic climate that led to low consumer demand. The Dublin base was closed down due to the dying consumer demand (Lars and Pervez, 2004).
Alessandro, C. (2008). The Airline Industry: Challenges in the 21st Century. New York, NY: Springer.
John, F. O. and George, W. (2011). Air Transport in the 21st Century: Key Strategic Developments. New York, NY: Ashgate Publishing, Ltd.
Rigas, D. (2006). The Airline Business. London: Routledge.