The global air transport industry has operated under a long history of government regulation and is currently operating under debatably onerous government policies. Unlike most global industries, the air transport industry is not free to operate truly as a global industry. It has been echoed that the inability to operate as true global industry is the cause for the imperfect global airline strategy of airline alliances, historically lack luster returns on very low margins leading to an unsustainable and unhealthy industry.

Under the decree of the 'freedoms of the air', airlines are prohibited from flying to foreign destinations unless bilateral or multilateral agreements are set in place between the respective countries. Most governments restrict foreign direct investment in their national airlines which effectively prohibits cross-border mergers. Even though deregulation and liberalization of the air transport industry is progressing, the air transport industry is frail.

This presentation discusses the structure and operating environment in which global airlines find themselves, and government regulations that affect competition and executive strategic decision making.