Opportunity Creation and Threat Perception: Focal Faculties in the Aviation Context

Abstract

The new civil aviation policy may be controversial because it marks a historic shift from potential intra industry sources of foreign investment to Tran’s industry sources (as distinct from purely financial consortia). This sets the stage for observing the unfolding of focal faculty theory in actual management practice especially at the regional level. Under this theory, there are no insuperable barriers to entry in the long run but only barriers to profitable imitation in the short run. In this paper we review some recent approvals granted to airline proposal to observe if there is any discernible movement in the predicted direction. Examples were found both at the national and regional levels. The brief review did not uncover evidence of radically innovative entry strategies by foreign players. Perhaps it’s just a case of “early days”. The examples identified involve actual aviation industry players engaged in well-known strategies of vertical integration or apparent positioning for horizontal integration at an appropriate time. While airlines seem to be maneuvering at the upper (national) level, aircraft manufactures/distributors seems to be active at the lower (regional) level. Even so prospects for a transformation of Indian aviation over 10-15 years is fairly certain. Two test cases for faculty theory were also identified. Oddly enough these were existing (or interested) firms which are required to divest the foreign airline stake in force (or contemplated). Who are the aviation savvy, yet “non-aviation” investor who will take up these stakes for the long term – financial investor or focal faculty investors? And, internationally, does this qualify as “liberalization” (pseudo or quasi)? Is conventional liberalization required to achieve take-off in the aviation sector? The paper concludes with a brief discussion of an approach to monitoring the “aero political” skyline for opportunity creation and threat perception. An appendix outlines the global aviation scene in terms of past experience with regulation, deregulation and liberalization.