Airline Industry Analysis
This report aims to present a summary of findings for a research study regarding the airline industry. The objective of this project was to first, gain new experience in the analysis process of an entire industry from an economic and business perspective as well as an environmental and social viewpoint. Secondly, the research attempts to provide direction for potential employment opportunities within the various aspects of the direct and indirect aeronautic and airline industry professions. The assessment of the airline industry entailed centralizing facts through a combination of case studies, governmental studies and reviews of both primary and secondary data research sources. In this scenario, case study and the vast amounts of secondary data offer a plethora of information which constitutes a comprehensive review of the aspects of the industry. Thus, the information was acquired through sources such as:
Physical Searches: searching core journals, relevant books and articles
Database Search: electronic databases both library and internet
Case Studies: Specific airlines, journals and statistics
Internet: web page studies and alternate business journal indexes
Interviews: experts and relevant organizations pertaining to the topic of Airline industry historical events
Industry Growth - Past, Present, and Future
The situation throughout the airline industry is at, or can be considered to be, very close to calamitous. Many major airline carriers such as American Airlines, Delta, United and Continental are already considering bankruptcy protection if in fact they are not already under court protection. In other words, bankruptcy has become a logical business option if not the only alternative to keep these organizations from complete economic collapse. Since deregulation occurred within the airline industry, bankruptcy has therefore kept a number of organizations somewhat solvent.
Of course, the historic events of September 11, 2001, where terrorists hijacked planes and perpetrated abominable attacks on several sites including the World Trade Center and the Pentagon, have been blamed as the underlying problem that have caused the industry's financial troubles. However, over the past four decades, the true factors creating the airline industry's problems stem from more obvious issues and concerns such as aging fleets, fuel prices and other economic concerns like labor management, growing trends toward globalization, reduced fairs in proportion to lower costs, frequent flights which entail fewer connections and airport expansion periods.
Industry experts now understand that the financial troubles suffered by carriers like United and American Airlines were already present throughout the industry long before September 11th. "The seeds of this disaster at United were sown long before September 11, and no amount of denial or obfuscating will change that." (Unavailable, The Washington Times, 2003) Today, the industry continues to face all new challenges which unfortunately also include the aftermath and effects of September 11th.
Newly defined factors therefore are at the root of the problem and change in these vital areas has not been supported well historically. "While globalization should continue to boost traffic, the other two drivers-cost cutting and convenience-are reaching their limits within the traditional model. In the past, major airlines could achieve significant profit improvement by increasing load factors; by moving from three- to two-engine aircraft, thereby saving on fuel; and by reducing the size of cockpit crews, saving labor costs. Furthermore, convenience has been declining of late; congestion and flight delays reached record levels before September 11, and the additional security measures now in place have added further difficulties for travelers." (Costa, Harned, & Lundquist, 2002)
Of course, for every rule there is an exception and this holds true in the airline industry as well. There have been some carriers that have shown a propensity to excel both economically and in regard to the social acceptance needed in a service and customer oriented business. For example, some success stories come from "discount" or "low-cost" carriers who have consistently stolen market share from major carriers. "While the majors lose billions of dollars (American Airlines lost $3.5 billion in 2001 and 2002 combined), low-cost carriers continue to earn profits. U.S. low-cost carriers AirTran Airways, JetBlue Airways and Southwest, and Canada's WestJet all made money in 2002. Southwest, while still consistently profitable, has faded to the background as start-ups such as JetBlue fly passengers across the U.S.A. In new Airbus A320s with satellite television at every seat. Even some of the majors are attempting to launch low-fares subsidiaries." (Karp, 2003)
Cost...
S. are seeing modest improvements in economic indicators. The social environment is favorable for air travel. The mode still holds tremendous cachet with consumers and is favored when consumers can afford it. There is some consideration that the airline business is a major contributor to greenhouse gases and therefore global warming, but as of yet the industry has not come under serious public pressure as it is generally viewed by the
This is significant, because it shows how in the next three years, the airlines are going to face increasing amounts of competition, in a number of different markets. This is because the industry is targeting the same demographics of business and leisure travelers. As a result, the increased amounts of deregulation, will affect the industry in the future, as increased amounts of competition will more than likely mean lower
Furthermore some of the existing companies already have loyal customers. Bargaining power of suppliers Suppliers have an effect on the industry through their ability to raise prices or reduce the quality of goods or services they provide. There are very few airline suppliers globally these are Airbus and Boeing this means that the suppliers have a high power since they are limited and hence control the market since the demand for
Airline Industry SWOT Analysis of the Airline Industry The airline industry offers transport services of people, cargo, and mail. Its development began in the 19th century, where the conception of the airships and, eventually, the flights of the Wilbur brothers via their airplane invention made flying for leisure possible. The development of air transportation for people includes the provision of cargo and mail services, made possible through air freights (such as the
Industry Analysis of the United States Oil & Gas Industry This report is an industry analysis on the United States oil & gas industry but does not delve into the industry related exploration and production pre-refining activities. The focus will be on the major producers such as Shell, Mobil, Texaco, Gulf and Exxon and how they are affected by the 5-forces model analysis. The report also analyzes the competition structure of the major
This means that while the business is profitable, it is in a state of constant, intense competition. Firms such as Costco must develop a competitive culture, and constantly benchmark against themselves in order to stay ahead of the myriad of different competitors. The future of this business is only good if competitive advantages and strong brand equity have been established, as is the case for Costco. For them, the industry's
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now