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Increased competition within global airline industry initiates consolidation activities on entering into different modes of cooperative arrangements including, franchising, code share agreements, alliances, mergers and acquisitions. Selecting the optimal business model means implementation of sustainable competitive strategy as one of the key airline business challenges. Characteristics and trends in airline competition worldwide were analyzed by using correlation and regression metrics. European air transport competition analyzes include specific Southeast Europe topics. The liberalization of the Croatian air transport market has significantly affected the increase in demand in the international scheduled passenger traffic from the year 2004. Air transport in Croatia is growing much faster compare to the maritime and land transport sectors. A significant structural change in the aviation market due to the strong increase of low-cost carriers share in international scheduled traffic occurs. At the same time, the share of domestic scheduled and charter transportation is stagnating. Croatia Airlines in restructuring process provided in the period 2011 2015 recognized necessity to justify market position through optimal network strategy.

AIR TRANSPORT COMPETITION CHALLENGES