One of the world’s most competitive and prominent industries is the airlines industry. It generates huge amounts of income as well as employment each year. Some of the common names in US air travel service providers are Alaska, Northwest, Southwest, US airways, American etc.
According to the latest statistics given by the International Air Transport Association (IATA), the airline sector will post a profit of $9 billion in 2011. After the recent credit crunch, economies are now coming back to normal, business travel is increasing and investments in the airlines are now rising.
Political/Legal influences
Privatization
Over the years airlines have undergone large-scale privatization; previously a significant portion of airlines industry was government-owned. Privatizing the industry has led to drastic increase in the number of air service providers and the airline travellers.
Legal provision
Civil Aeronautics Board (CAB) was established to control the activities of the commercial Airline industry; it used to set the rates and even the mergers in the industry till the first forty years after its establishment. Then Airline Deregulation Act 1978 was adopted to make the industry more efficient and privately owned. This act removed the powers of CAB, subsequently CAB was wound up in 1984. This act still gives the authority of regulating air safety to government through Federal Aviation Administration. All airlines need to have 2 certificates:
1. Fitness certificate (issued by Department Of Transportation): To ensure the airline is financially and management-wise strong enough to carry on the services adequately.
2. Operating certificate (issued by Federal Aviation Administration): To ensure that the airline maintains it cre...
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Manufacturers of large aircrafts are conducting large scale outsourcing of key components especially from japanese manufacturers.
Better communication
Over the years, airlines have introduced new ways of adding value to the firm, for instance online reservation system and forwarding information to the system have opened new avenues to reach customers. (Lars Perner, 2007). Improvements in air-traffic management are also being implemented to ensure flight safety and cordination among aircrafts and various aviation companies (Capoccitti, Khare, & Mildenberger, 2010 ).
The role of research in military technology has contributed a lot to the commercial jets (Collopy, 2004). The commercial airline industry has gone way ahead than the military aircraft industry, due to its public outreach. However the technology in military aircrafts is still way ahead.
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
The airline industry is very competitive, the market share of the industry is control by a few companies that spends millions of dollars into advertising. The industry have a lot of competitor that go bankrupt in 1987 87 airlines failed. It is very hard for airline companies to have a competitive advantage after all of the regulations and upkeep it take to have an airline. And then to have great customer service.
3. Fortunately, there are several opportunities in the airline industry of which companies will be able to take advantage. First, the airline industry is reviving and passenger levels are now returning to pre-9/11 status. Companies can offer high degrees of service and reduce costs through the use of the Internet, such as online ticket sales, flight seating charts, and plane infor...
The first one includes the political and legal factors. These include the intervention of the government in the economic operations of the industry. The government intervention is necessary since it protects the interests of the passengers as well as the safety measures of the airline operations, (Inkpen & Degroot, 12). Economic factors are
On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive.
The Global Industry, with the help of globalization, has been connecting the world for the past few years, and have been the missing link to a global economy that is slowly but steadily dominating the world. Over the past 30 years, statistics have shown an average 5% increase of World Air Travel, with the statistics constantly fluctuating up and down, varying due to the economy influence all over the world but it is unquestionable that there has been a steady improvement of demand. Airlines have been increasingly gaining popularity from across the world. According to the International Air Transport Association (IATA), statistics has shown that the airline industry has been generating a lot of profit for the global growth of the economy, with
The objective of this research report is to provide a thorough analysis of Alaska Airlines. In order to do this we chose to compare a similar company against them. The company in comparison is Spirit Airlines. Both companies compete in the same type of business through airline transportation. Many of their services include; security, safety, transportation of passengers as well as luggage, ensuring vehicle safety while in transit, concierge services, providing entertainment aboard plane, checking weather conditions prior to flight, and much more. All of the data gathered for this report was obtained from the company’s 10-k filings with the SEC.
International and domestic aviation industries exhibit large changes in political environments, affecting mannerisms of customer travel (asse.org, 2017). Aviation bodies, including International Air Transport Association (IATA , 2017), regulating international air transport, and Civil Aviation Authority (CASA, 2017), regulating Australian air services, have authority in ensuring execution of the correct practices and procedures. The Australian Competition & Consumer Commission (ACCC, 2017), ensures government regulations, trade agreements, and taxation laws are executed. International political trade relationships, affect passenger numbers travelling between countries, and political instability affects Qantas revenues (Kaivanto & Zhang, 2017).
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
In 1978, deregulation removed government control over fares and domestic routes. A slew of new entrants entered the market, but within 10 years, all but one airline (America West), had failed and ceased to exist. With long-term growth estimates of 4 percent for air travel, it's attractive for new firms to service the demand. It was as simple as having enough capital to lease a plane and passengers willing to pay for a seat on the plane. In recent news, the story about an 18-yr British...
On October 24, 1978, President Carter signed into law the Airline Deregulation Act. The purpose of the law was to effectively get the federal government out of the airline business. By allowing the airlines to compete for their customers' travel dollars, was the thinking, that fares would drop and an increased number of routes would spring up.
During 19991-1992, Modiluft, East West and Damania went bankrupt. Air Sahara and Jet Airways survived along with government own Indian Airlines because they had the capability to bear losses. Globalization and privatization had a major impact on aviation industry. Indian aviation industry was deregulated by the government in 1990s. As a result now 14 airlines are operating today in Indian sky. Now, collaboration with international organization and foreign direct investment are welcome to improve infrastructure and technology. Today people who can not afford high prices of Full Service Carriers (FSC) can travel by Low Cost Carriers (LCC) or budget airlines. Air Deccan was India’s first LCC started in 2003. It flies to several metro and non-metro destinations. All airlines have three major fixed costs i.e. fuel costs, financing or aircraft lease and labour cost. But LCC costs are 10 to 15 per cent lower than FSC. This is because of three reasons. Firstly, saving on distribution cost as passengers book tickets on the internet. Secondly, no frills are offered on board. Thirdly, to accommodate additional seats, catering and cabin crew space in these aircraft has been used. So these aircraft have 40 seats more than the FSC.
To buttress the implication of the model, Porter explained why the airline industry is the least profitable amongst industries owing to the high threat of the competitive forces. The airline industry players compete heavily on price. Most custom...
Northwest Airlines is one of the pioneers in the airline transportation industry and is ranked at the fourth largest air carrier in the United States today. The success of the carrier depends on the quality and reliability of the service at a reasonable price. Close competitors force Northwest to innovate their services by increasing efficiency. This essay will try to examine different perspectives in the services needed to successfully complete the company’s objectives. The analysis will explain historical and financial perspectives that may give a better understanding of the current market trend of the organization.
Several large scale, interrelated conditions have affected the airline industry over the past several years in such a manner that every carrier has had to respond in order to remain viable and competitive.