Air Fare Tariffs

The fares charged by airline companies directly influence international tourism flows. International tourism development is hampered because airlines in some areas in the world (Africa, for instance) suffer from high operating costs resulting from their low productivity. In contrast, South East Asian airline companies have very high productivity and succeed in keeping their prices low.

While some countries and regions apply protect ion i si policies which keep the prices high, others have an Open Skies policy to encourage competition and keep prices low. Several countries allow a certain amount ol competition but still regulate the industry to ensure that prices remain relatively high. This is normally to prevent the arrival of too many tourists, particularly if their presence is resented by the local population.

Available and efficient transport structures are key conditions for the development of international tourism. Air transport is vital to countries far from generating markets, the medium- and long-haul destinations. Restrictive regulation of the market has in many cases impeded tourism development.

The deregulation of the air transport industry has created considerable upheaval, first in the United States and on routes to North America, then on all international routes. By focusing the process of deregulation on free access to the market, the industry has become very competitive with many new companies catering the market. As a result, prices have substantially fallen and many countries now have the opportunity of becoming important tourism destinations. It is important to find ways of encouraging cooperation between the tourism sector and the air transport sector. In particular, issues associated with the commercialisation and the computerised distribution of tourism products and flights must be studied in detail.

For instance, will the development of global distribution systems (GDS) bring opportunities for the tourism sector or will hotel and tourism companies become dependent on the strategic aim of the airline companies?

These concerns determine the sales and marketing strategies of companies selling tourism products.

(adapted from International Tourism)

Task 1. Answer the questions.

1. Why is transport significant to the growth of international tourism?

2. What makes air transport so vital for the creation of new tourism markets?

3. What are the three conditions which characterised air transport in the 1990s?

4. What are the main features of each of them?

5. What does the economic analysis of air transport reveal?

6. Why are cost structures different for scheduled and nonscheduled airlines?

7. What do direct operating costs include?

8. What are indirect operating costs?

9. What kinds of indirect operating costs does the text mention?

10. Why are labour costs increasing?

11. What problems of air transport are associated with international tourism development?

12. What are the ways of solving them?

515. Task 2. Sum up the information you’ve learned from the text

516. Task 3. Comment on the following issues.

1. What do you know about cooperation of air transport and tourism sector in Russia?

2. What are the advantages and disadvantages of travelling by air in Russia?

3. Is there any competition between Russian and Western airlines? What do you know about it?

4. Does Russia participate in any international agreements on air transport? What do you know about such agreements?

5. What are the main problems facing Russian airlines?

6. What are the ways of solving these problems?