Sample Aviation Paper on Why Airlines should not be subsidized

Introduction

Airlines operations should not be subsidized; instead they should concentrate on service delivery to generate more revenues to boost their operations. United States signed an agreement with other European countries that aimed at addressing issues such as user charges and fair competition in the aviation industry. Meaningfully, the agreement seeks to allow fair and equal opportunity for commercial airlines and thus intervention should not be in terms of subsidies but limited to protecting airlines from price fluctuations.

Background

Continued government subsidies to airlines such as Emirates and Etihad airlines are destroying healthy competition that has been a characteristic of the aviation industry for long. Consequently, subsidies make such airlines to not behave in accordance with rational business philosophies and thus make the playing field unbalanced. Though, other scholars have affirmed that little subsidy given to airlines is just a method to retain stake and ownership and to the contrary is not a lender of last resort (Bashar npg).

Airline operations should not be subsidized because this is always a remedy for failure and poor performance. If they are not bailed out by governments, airlines are able to adjust their operations and capacities to compete effectively with domestic and international airlines to dominate the industry and generate suffice revenues to yield more revenues. Subsidies come in form of free loans and with no obligation to repay, this in the process violate Open Skies policy eliminating fair business operations.  

Moreover, government subsidies inflict pressure to airline management and in the process, affect major decision making. Airline companies devoid of government subsidies and interference may make sound decisions and manage operations effectively to the extent of deploying more aircrafts to more routes and destinations to generate more profits.

Recommendation and Conclusion

Government subsidies are not necessary because the market and industry is increasingly becoming liberalized. This means that failing airlines should be allowed to fail as this will act as an eye opener to other operating airlines. To conclude, it is time for airlines to operate efficiently and profitably without the help of governments or simply go out of business.

Work Cited

Bashar Malkawi. US airlines should focus on service, not subsidies. Business. The National.

March 19, 2015. Web Retrieved from http://www.thenational.ae/business/aviation/us-airlines-should-focus-on-service-not-subsidies