California Management Review

Abstract

Embraer Aircraft Co., a Brazilian state-owned aerospace company, began exporting its twin-engine turboprop plane to the U.S. in 1979. It delivered 5 planes in 1979, 20 in 1980, 37 in 1981 and 14 in the first half of 1982. They were able to capture about a third of the U.S. market in four years. This article analyzes their strategy, U.S. competitive response and the general implications that can be drawn for meeting competition from newly industrializing countries in high-technology industries. The Airline Deregulation Act of 1978 changed airline industry structure to the benefit of commuter airlines. The act gave large carriers freedom of market entry and exit; as a result, they withdrew from smaller, short-haul markets. About 100 cities lost all jet service, with 170 smaller cities in all losing some jet service. This left commuter airlines with a monopoly in several markets. Civil Aeronautics Board certification became easier to obtain and joint fare agreements between commuters and large airlines were encouraged.

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