The Importance of Air Transport for the Cities and Regional Development in Poland - Research Proposal Example

1. Introduction: Executive Summary The effect of liberalisation by way of the new entrants and development of competition on many of the routes within Europe has been constrained by the lack of capacity at key airports. The creation of a single air transport market in the European Union made substantial benefits for customers and improved the competitiveness of the European Union air transport industry. Implementing the transparent, common and obligatory air transport law in all of the Member States in the European Union was imposed by the necessity of free, fair and undisturbed competition on the market of air transport services. The following research looks at the process that characterized the liberalistion of the air market in Europe and the variables associated with it. In the process, there is a multitude of issues like small airports, privatization of airlines among other things that the paper will try to dissect. Keeping this context in place, the following research will look at the impact of the ;liberalization process on the air market in Poland. 1.1. Background In Poland there is a progressive betterment in the kind of infrastructure there is available where air transport is concerned. During the last two years, the number of civil airports servicing international air connections has increased. Frederic Chopin is the largest airport in the country, and is located in Warsaw. Poland has customary connectivity with 32 countries and 56 cities around the world. The air transport industry in Europe has grown by leaps and bounds after the introduction of the deregulation regime which has allowed the investment of private players along with a certain flexibility for airline management where the private investors were concerned. interestingly, the concept of deregulation is one which could be understood and accepted in the context of the overall concept of the European Union which has integration across borders and removal of barriers at the very heart of the reform. With increasing deregulation and the acceptance of the open skies agreement, there has been a greater increase in passanger traffic across Europe. The following research will track this growth while keeping in mind how this has had an impact on the erstwhile USSR controlled satellites in general and Poland in particular. 2008-2009 growth in total passenger air transport by Member State (in % 1.2. Hypothesis The following research is built on a premise that the process of deregulation and liberalization that came into force during the early half of the 1990s, where the European aviation industry is concerned has made impacts on the growth and development of the air transport industry in Poland. Air transport has a significant influence on dynamic economic development of subcarpathian region. As an industry, air transport is characterized by innovation which tends to drive progress, both social and economic. 1.3. General aim:The main aim of this research project is providing a significant and positive impact of air transport for dynamic regional development in subcarpathian region in Poland.  1.4. Objectives of Research: The following section of this paper identifies the main objectives that this paper will aims at achieving have been specified: a. Characterize the air transport industry in Europe 2.Describe the air transport in Poland. 3. To analyse the advantages of air transport in Poland. 4. To give an overview of polish aviation industry and its main trends. 5. Define the economic and social benefits of air transport. 6. To identify the appropriate role for air transport in regional development. 7. Future trends of air transport in Poland. b. c. d. 1.5. Methodology: The research is will be an amalgamation of the existing views that are present on the topic. The author will make use of the information available to draw her inferences, which means that we will choose to prove the hypothesis based on the literature available on the issue. This is relevant as well as justified, given the very premise of the paper is a research based argumentative essay that seeks to put point across based on the present literature on education and science. One could in this context analyse features characterizing quantitative study, a methodology of the literature review is a subtext. The first major aspect of the methodology is the application of the quantitative method of analysis that would seek to substantiate the analysis put forward by the literature review and the case study analysis (Abeyasekera and Lawson-McDowall, 2000). The method by nature is useful in the measurement of demographic. The point of usage here is due to the fact that the method is used in terms of large samples (up to full census) with a lot of stress on a high rate of response. The nature of the study is inferential which means also that it has chosen to make use of the descriptive quantitative approach to gain a deeper understanding of the research objectives. The approach would help in the examination of the current problems that exist in the model of a globalised method of science based educational research and the methods that could be used for its correction. The method would help in ensuring that the research retains its empirical nature. According to Matveev (2002), the quantitative research employs numerical an quantitative indicators to ascertain the relative size of a particular communication phenomenon. The quantitative method is appropriate here given the fact that the quantitative method of research is guided by a functional or positivist paradigm. According to Morgan & Smircich (1980) this has its basis in the assumption that social reality has an objective ontological structure and that individuals are responding agents to this objective environment. Smith (1988) further reports that the quantitative method of research is one that is made up of counting and measuring events and performing the statistical analysis of a body of numerical data. According to Cassell and Symon (1994) the basic functioning assumption behind the positivist paradigm is that there is an objective truth existing in the world that can be measured and explained scientifically. The main concerns of the quantitative paradigm are that measurement is reliable, valid, and generalizable in its clear prediction of cause and effect. This would therefore be effective in the instance of our case given the fact that the basic issue is the measurement of behavioral trends in the most scientific manner possible. The method is highly deductive and particularistic. This in turn implies that the research would be based on the formulation of a research hypothesis. Frankfort-Nachmias & Nachmias, (1992) explain that the method is then followed by verification backed by data that has been empirically obtained. According to Ting-Toomey, (1984) the scientific hypotheses are value-free; the researcher's own values, biases, and subjective preferences have no place in the quantitative approach. Researchers can view the communication process as concrete and tangible and can analyze it without contacting actual people involved in communication.       The quantitative method of inquiry would therefore mean that this researcher aims at investigating the relationship of influence between various factors such as demographic, intrinsic, and extrinsic on the degree of job satisfaction among Omani doctors and nurses.  This would therefore mean that at the end of the research, the results would have high levels of reliability because according to a study by Balsley (1970), the data gathered due to controlled observations, laboratory experiments, mass surveys, or other form of research manipulations is usually more empirically correct. 2: Literature Review Introduction Liberalization as process usually stems from deregulation. Deregulation of the air transport industry, in its various firms, results in the creation of international and large domestic air transport markets that are more competitive than ever before. This induces national governments to liberalize beyond national borders in more than one ways. Liberalization per se does not however imply deregulation in the strict sense of the word; it could imply the introduction of new regulations on a voluntary basis. Regulation may be conducive to realizing liberalization (Wassenbergh, 1988). The final conclusion is that the ultimate goal of deregulation is liberalization, a much broader concept than deregulation. 2.1. Considerations for the deregulation of transport services: Air transport services have traditionally been under the exclusive control o States because of the various considerations of vital national interests involved. Most of all, the firmly held principle of national sovereignty over airspace has succeeded in deterring liberalization, while considerations of national security have also served as an effective excuse. However, with the expansion and maturity of the air transport industry, new trends favoring liberalization have arisen. Sinha (2002) states that the First, technological development has brought about drastic increases in aviation ability and capacity. The evolving technology of air transport was one of the key factors that led to the need of regulatory adjustments and spurred fundamental economic change (Gialloreto, 2004), such as the fact that the success of JetBlue Airways threatens further to undermine the network airline pricing model. Startling developments in the field of aeronautics have challenged the effectiveness of the state sovereignty in this area. The progressive liberalisation of the Community’s aviation market, which culminated in the so-called “Third Package” of 1992, dismantled these regulatory barriers to entry and competition. Most fundamentally it introduced the concept of a “Community air carrier”, which must be majority owned and effectively controlled by EC interests. For the most part, the Third Package allowed any given airline to work with an Operating Licence which would allow them to offer their services anywhere within the Community, keeping flexible the variables of frequency of flying, the capacity usage and the setting of fares. These would be subjected to regulation and control solely in well defined circumstances. Overview of the EU-27 air passenger transport in 2009 The role of liberalization processes for airport hierarchy is analyzed together with its economic aspects (Borenstein, 1990). Liberalization of air transportation connected with its deregulation is also treated as an impact factor on qualities of airlines services. The impact of legal conditions on air transportation systems and airport hierarchy changes was also analyzed for particular airports (Barbot, 2006).  Globalization is a process, which increases interaction between processes and people at every level of living-the cultural, political and the economic. This translates to removal of trade barriers, the transfer of democratic processes, and a greater interaction of cultures from around the world. According to Teune, (2000), politics plays a big role in globalization and its related processes because governments the world over are dominated by the ‘democratic trend’. He claimed that several forces such as technology, which enable connectivity and collaboration, are creating a level playing field of global competitiveness (Friedman, 2007). Ghemawat on the other hand in response to Friedman argues that globalization does not bind people, countries, and markets closer than ever. He makes use of data, which reveals a world that is just a fraction as integrated as the one we thought we knew. Even this could slip away (Ghemawat, 2007). Also air transport serves as a kind of infrastructure for other services, such as tourism and other ad other commercial transactions, which depend on good transport conditions, to take another example, th world has witnessed the rapid development of electronic commerce through the internet in recent years, simplifying some ways o doing business and facilitating direct business with the consumer. Yet these business transactions do not end with the website operation, as they still require the transportation of the goods to the consumer. Rocka and Weyna (2006) state that the goal of electronic commerce is achieved only when the goods reach the consumer properly and more expeditiously. Without an adequate transport web and even more significant, a liberalized and reliable transport system. The rapid ad healthy development of electronic commerce is in fact unthinkable. Importance of deregulation and growth of air transport with benefits 2.2 The impact of air transport on the economic development of cities and regions Considerable changes have taken place in commercial passenger air transport since the enactment of the 1978 Airline Deregulation Act in the US and the deregulation of airline networks that has occurred elsewhere. The commercial and operational freedoms have led most of the larger carriers to develop hub-and-spoke networks, within which certain cities or metropolitan areas emerge as key nodes possessing tremendous advantages over other locations in the air transport system. There is sufficient evidence to suggest a close relationship between airline activity and economic growth. Suggestions of research is that increase in air transport acts as the driving force behind economic growth which in turn derives benefits from the same. A recent research by the ICAO of Global GDP and air transport activity as measured found that there was in place an affirmative relationship between air transport as a sector and global wealth creation. An increase in air transportation between two countries is usually expected to aid economic activity along the lines of at least a US$ 15 billion benefit which would also then translate into the creation of jobs for thousands in the countries concerned. The idea therefore is that there is a synergy between the system of air transport and growth of the nation. This could lead for one to consider the fact that the level of growth in air transport movement could offer a useful pointer of the level of financial development in any given country. Economic Liberalisation in Europe 2.3. Regional Airports: The use if regional airports have many advantages. First satisfactory airport capacity availability and the opportunity to promote socio-economic development of decentralized areas and regions. Also these airports allow the reduction of negative impacts due to less traffic levels and aid the development of a spreader air service network. In this light, many policies have been introduced by the EU, specifically addressed to promote the revaluation of regional airports in several EU nations. As stated by the European Commission (EC), regional airports are important to the development of an integrated European air transport network. In this respect it would be desirable also to unlock the existing latent capacity at regional airports provided that member’s states are able to respect Community legal instruments relating to state aids. Also, the growth of low-cost air carriers has given a further impulse to the re-valuation of regional airports. In fact these prefer using regional airports to due to reasons of reduced aviation costs, competitive taxi and turn-around times, and availability of airport capacity due to low traffic congestion and so on (Postorino, 2009). Furthermore, this cold also enefit from start-ups within the rules of compatibility established by the Article 87-89 of the EC treaties and the Community Guidelines on financing of airports and start-ups aid to the airlines departing from regional airports. Particularly, article 87(3)(a) and (c) apply in relation to undertakings established or investing in disadvantaged regions. The Guidelines specifically refer to its application in relation o aid for undertakings financing the building of a hangar in such regions. However 87(3)(c) cannot be used to justify operating aids. Moreover, in a thesis, Polkowska (2004) stated that all of this essentially amounts to signifying the fact that there is an abject recognition on the part of the EC regarding the importance of regional airports for the development of an integrated European air transport network because their existing latent capacity can reduce the congestion peaks at main airports. This would also then mean that the use of regional airports can bring many advantages not only to the air companies airports and users, but also to the whole the community both in terms of social benefits (increased accessibility from decentralized or peripheral regions) and potential economic Expansion. Activities of airports do on one site trigger the development of direct and indirect employment, Investments. Direct effects are inclusive of creation of employment and income through the businesses placed directly at or near the airport. This includes businesses, industry pr services and the gained profits resulting in taxes paid. Indirect effects are characterized by the creation of employment and income outside the airport. Businesses that are placed at the airport require intermediate input from businesses outside, which again might require vendor support from outside as well. This could include businesses such as building companies, fuel suppliers, cleaning companies suppliers of food among others. The induced effect finally could be explained as employment and inome created through actions of direct and indirect operations. One could describe this as a value chain, which starts at the airport and goes down the line to providers not directly connected to the airport business. 2.4. Open skies and global alliances in Europe  According to research by the community’s reform programme was almost entirely consumed with the task of liberalizing the scheduled air passenger industry (in effect the scheduled airline industry), but the air transport industry is a more complex, value chain that also includes airport operators, air traffic control providers, global distributions systems and ground handling companies, all of which have inputs into determining the price of an airline product. And the chain of providers is expandable, since it also includes monopolistic practices among less direct industry participants such as caterers and fuel suppliers. All of these practices drive costs up even as ticket prices are driven in a liberalized ticket market. if one were to look at the advantages of the ‘open skies policy’ one would find that these basically range from the creation of a multitude of financial gains that include tourism, work opportunities and places of growth for consumers. On the opposite sense, policies that are restrictive by way of air services end up stifling travel and business. This tends to have an adverse impact on fiscal gain and creation of jobs. Incidentally, complete liberalization of air transport in US and UK alone would lead to the creation of 117,000 jobs and aid the generation of $7.8 billion in economic value. An overwhelming impetus for liberalization comes from the necessity for countries to improve the functioning of their services market and this to raise economic efficiency and promote growth and development. Further economic development requires decreasing costs and increasing reliability of transportation. A proper economic climate and improvement in transportation can become catalysts for economic expansion. The market forces as an invisible hand adjust supply and demand and have compelled the aviation industry as well as the State aviation authorities to increase their efforts to succeed in the market place. Formerly political considerations took priority in matters of type of services, quantity and so on, thereby sacrificing economic efficiency. This was apparent in the stringent national regulations. Considerations of the so-called protection o national security raised costs for domestic consumers and this rendered domestic services raised costs for domestic consumers and this rendered domestic air service less competitive. This adversely affected the air transport suppliers’ ability to make profits and they in turn grew reluctant to improve their services. The effects of deregulation have been broadly analyzed by several authors looking specifically at the effect on one aspect or another of the industry such as network development, pricing behavior, airlines-airports relations, and alliances. Cento (2009) outlined three major categories of the airline business model: Full Service carriers Low cost carriers; and Charter Carriers He states also that at least on the supply side, few industries, if any have faced the kind of dramatic upheaval that characterized the European aviation since the process of deregulation took effect. Before the process’ initiation, only one or two flag carriers operated the European routes with airfares being regulated by state bilateral agreements. Also the open skies agreement, which was in effect the most ambitious deal ever signed in the services sector, took effect on March 2008, by whih European airlines could fly without restrictions from any point in the EU to any point in the US. The new eu-US agreement was expected to increase competition and reduce the airfares in the biggest international air transport market. The Open-Skies agreement contains three key elements which researchers think would be decisive in the future of worldwide air traffic. Because of Washington's refusal to show more flexibility on ownership and investment rules in the first stage negotiations, the EU obtained a "suspension clause" in the final deal, which allows it to suspend US newly obtained access rights if the US does not take further steps towards opening up its domestic market and loosening its rules on foreign investment and ownership within 12 months, by end-2010. 2.5 Low cost Carriers and industry development Paprocki, W., and Pieriegud, J. (2005) explain the commercial aviation in the European Community and state that this was regulated by a system based on bilateral negotiations until the late 1980s. Regulation ensured that airlines did not compete on protected and fragmented aviation markets. The lack of competition conflicted with the aim of the Treaty of Rome of having  a common economic market. According to article 49 of the Treaty establishing the European Community “restrictions on freedom to provide services within the Community shall be prohibited”15 The regulatory system which governed aviation within the European Community had, by 1993, been replaced by  a Single Market for aviation (Rocka and Weyna, 2006). The opening of the European air transport sector was implemented in four main stages, the so-called “air packages” by regulating rules of competition, access to the market, procedure of setting prices and recognizing air carriers licenses, in order to create a single market for aviation (European Commission, 2005).   According to Page (2005), the European Union (EU) was very slow to embody air transport in its Common Transport Policy (CTP).this reflected, in part, the still relatively small role it played in economic interactions in Europe in the formative years of the EU, the 1950s and the 1960s. The situation changed significantly in the late 1980s and 1990s, when national policies for air transport were gradually brought within the broader framework of EU policy. The need for a coordinated infrastructure policy, especially regarding air traffic control, furthered the role of the EU. This process is an on-going one as matters of authority over external EU policy continue to be debated. The impact of the legal aspects on air transportation market functioning cause visible spatial changes. They are not only concentrated on the moving of the gravity centre of air transportation to Central Europe, but also on the activation of airports in this part of the continent. The dynamics of passenger traffic growth is the largest here and changes the position of its airports in the continental hierarchy. The growing popularity of low cost carriers has a spatial impact. It changes the airport hierarchy by cumulating a greater and greater part of the air transportation market of the served agglomeration, and it also influences local economic activity (as an enterprise localization factor) and land use structure (new logistic centre localization, parking space, etc.). Until the 1990s, the European air transport industry was highly regulated, with governments controlling routes, national routes were often licensed to the national airline and international routes to the two respective national airlines (Travis, R, 2001). According to Latrou and Oretti (2007), since 1993, the industry has been progressively deregulated and competition has increased with a growing availability of discount fares. Code sharing airline alliances have reduced competition as well. The most important institutional change that has occurred in Europe has been the phased liberalization of airline services both within the EU and within the countries that have linked into the EU air transport structure, this has opened up the intra-European market for airline services and involved the EU in efforts to initiate more efficient air traffic control and to modify the ways in which airports have traditionally carried on their business. A large part of these reforms have been initiated by specific air transport policies, which are also known as the Packages. These have, however, also been entwined with the applications of more generic EU wide policies in areas such as antitrust laws. In the wider international arena, many European states have engaged in more liberal air service agreements most notably in Open Skies arrangements with the US, that have broadened the basis of international competition. According to Stoman (2006) phased enlargement of Union membership has been bought about under provisions of the Nice and Copenhagen Agreements with the first being initiated in 2004. A major challenge for the future will be to ensure that these enlargements will be accompanied by appropriate air service provision. These institutional developments have also been paralleled by pother changes, there have been technology changes, including a move to using regional jets, the transformation of supporting telecommunications infrastructure, and investments in competing modes of transport-notably high speed rail-have taken place (Stoman, 2006). There have been shifts in the industrial structure of Europe, with the rapid expansion in the service industries and in the growth in globalization. Significant demographic changes are taking place as the populations of many of the European countries begin to age and the demands for leisure activities change. Business cycle effects to which the air transport sector is particularly sensitive, have perhaps become more and more pronounced. Ties to this is the fact that traditional international economic structures whereby at least one of the major world economies have grown even if the others have been in recession no longer seems to hold. Japan and Germany seem to be afflicted with on-going structural economies problems. These features have added to the overall sense o uncertainty that characterize the industry as a whole. Europe is currently the world’s first fully deregulated region, or single market consisting of 15 member states, the thee States belonging to the European Economic Area (EEA) and Switzerland in addition to-since 2004-the 10 new members of the European Union, European liberalization ensured open and unrestricted market access to any routes within the EU for airlines from any member state and removed all capacity control and virtually all price controls. Ownership constraints were relaxed so that airlines with unlimited access rights could be owned. Reference: Postorino, M. N., (2009). Development of Regional Airports: Theoretical Analyses and Case Studies. WIT Press. p29. Wassenbergh, N., (1988). ‘New Aspects of National Aviation Policies and the Future of International Air Transport Regulation. 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Quantitative research methods for business and economics. New York: Random House  Cohen, L, 2007, Research Methods in Education, British Journal of Educational Studies, Vol 55: Part 9 Giddens, A 1974, Positivism and Sociology. Heinemann, London. 1974. Stoman, J., (2006). Economics. Pearson Publication. Pp127-130. Latrou, K., and Oretti, M., (2007). Airline choices for the future: from alliances to mergers. Ashgate Publishing. pp7-10 Reports of Conferences, 12 AIR L. 303, 306 (1987) (Fourth Lloyd's of London Press International Aviation Law Seminar, Algarve, Portugal, Oct. 11-16, 1987). Hammarskjild, D., (1987). ‘Deregulation - Idealism, Ideology or Power Politics? Focus Europe. Annals of Air and Space. Vol. 18. Page, S.J. (2005). Transport and Tourism. Person Prentice Hall Publishing. Harlow. Pp227-230 Rocka K., Weyna M. (2006), Development of LCC in Poland after EU Accession, SGH, Warsaw Sinha, D. (2002). Deregulation and Liberalisation of the Airline Industry. Ashgate Publishing Limited. p189. H. Teune (2000), “Modernization, Development, Democracy, and Conflict” in J. Ciprut (ed). Fears and Foes: Security and Insecurity in an Evolving Global Political Economy. New York: Praeger. Ghemawat, P. (2007) “Why the world isn’t flat”, Foreign Policy, March-April, 159, pp. 54-60 Travis R. (2001), Air Transport Liberalisation in the European Community 1987-1992. A Case of Integration, Uppsala University Press, Uppsala. Open Skies: the EU‐US Air Transport Agreement. Retrieved March 19, 2011. Cento, A., (2009). The Airline Industry: Challenges in the 21st Century. Springer Publications. Pp17-21 Read More