TRANSPORTATI

ON

Get a move on!

The Transportation Sector

Includes three industries:

1) Airline Industry,

2) the surface travel industries and

3) The cruise and marine industries

The Transportation Sector

The transportation industry is different from almost any other industry because it operates in a very regulated environment

Regulation?

What is regulation?

Regulation is when the governments own, or impose conditions or restrictions on an industry.

Regulation?

Why do such a thing?

Lets take a trip back in time to America’s golden age of selfish profiteering!

Back in the day…

America used to have extremely unregulated businesses.

Everyone was in it for themselves and many people believed the competition between companies would force prices to stay reasonable.

Back in the day…

But every now and then one company would get ahead.

They would use that better position to either buy out other companies, or destroy them by taking all their business.

Back in the day

This left us with two dangerous types of companies:

1) The monopoly – a company that controls an entire product or service

2) A Trust – a group of companies controlled by a central authority whose purpose is to create a monopoly.

Back in the day…

One example of this was the railroad industry, which was the most important form of transportation in America.

Each railroad company had a near monopoly over transportation in their area.

Back in the day…

The public was becoming concerned about the power the railroads had over their lives.

If they didn’t like what the companies were doing they could walk to the next state for all anyone cared.

Back in the day…

Many railroad companies would charge different rates for different people.

Sometimes the rate charges made sense; sometimes they just didn’t like your face. Either way, there was nothing you could do about it.

Back in the day…

The US government passed the Interstate Commerce Act in 1887 requiring railroads to post their prices for everyone to see.

They also had to give public notice if they planned to change anything.

How does this relate to today?

In Canada, public transportation accounts for almost half of tourism spending.

Everything the transportations companies do is regulated

What is regulated?

Entry- Would you like to provide a service? Get permission

Exit- Would you like to stop providing a service? Get permission

Rates- Want to raise/lower your rates? Get permission

What is regulated?

Freedom to manage- Would you like to change your business around so you can provide a better service and remain competitive? Get permission

Mergers and Acquisitions: Do you and your friend want to merge companies to create a better company? Get permission.

Different forms of Regulation

Some countries regulate simply by telling companies what they can or cannot do.

Other areas regulate by creating government companies or encouraging smaller businesses that can offer better prices.

What do you think?

Which form of regulation do you think is better?

Why?

TRANSPORTATION!