Management Contracts: A Role in Internationalisation?

The nature and potential of management contracts as a method of internationalisation are analysed with reference to Australia′s leading domestic airline, Ansett. The restrictive regulatory environment of the airline industry, especially in Australia, had prevented Ansett from conducting direct international airline services out of Australia. As a result, it was forced to develop international operations by other means. This coincided with a desire by a number of newly independent nations in the South Pacific to set up their own airlines. However, they lacked the necessary finance and expertise, and so looked to the established airlines for an acceptable package. For both sides the management contract with aircraft leasing provided an acceptable answer. Although the arrangements had mixed success for Ansett, they gave it basic experience in international operations which has led to diverse international arrangements – including equity sharing with some airlines, and even more widespread leasing deals. While making a limited contribution in themselves, the management contracts were important as a springboard to wider international involvement.