Air travel is a huge and tremendously flourishing industry. Globalization can be defined as the integration of national and local economics, culture and societies through a web of communication, transportation and trade. The current era considers globalization as the dominant driver of almost all business due to the influence or the international market. The emerging prosperity of the global aviation industry plays a substantial role in economic growth, tourism, global investment and world trade, which are the impacts of globalization. This essay portrays the negative and positive effects of this globalization on the airline industry. One of the major positive impact of globalization can be seen in the expansion of airlines outside their home …show more content…
Tourism is an industry, with air transport becoming an indispensable factor. One major growing trend in airline industry is market globalization. People travel to other countries for both business and leisure purposes, leading to 7% increment in air travel per year. As a market is globalized, those involved will evolve into global customers who go in search of suppliers running on global base. This leads to a growth in business travel due to the global involvement of companies in terms of investments, production chain, supply and customers. Thus, the participation of air transport in facilitating the world trade is prodigious. Aviation implements another economic benefit of the air transport by providing consumer welfare to individuals while considering the environmental brunt such as the air quality, congestion and noise in the proximity of airports. Air transport being highly demanding has doubled the passenger numbers since the 1980s and over the last decade, it has increased by 45%. The huge growth and development of the aviation field has benefitted in heaps regarding …show more content…
This will lead to the limitations on the number of routes the international carriers fly, flight schedules, fares, etc. The past five years witnessed an increase in the cost of fuel, leading many airlines into bankruptcies, which resulted in consequences such as the $30 billion loss faced by the US airline industry as estimated by the US Airport Transport Association. One of the major political factor of globalization that affected airline industry was 9/11. In order to deter future terrorist threats, several security rules and regulations were enforced, which led to the increased cost of aviation operators to administer the fundamental training and personnel to follow these rules. Additionally, the post 9/11 period saw a decline in passenger and consumer requirements, negatively affecting the airline profits. There was a revenue drop of dollar 22 billion and three years were taken to recover them. But these revenues were dropped by 14% during the global financial crisis during the years 2008 and 2009, which was reclaimed to a large extend in the following year. The 9/11 period brought forward a huge global impact such as decline in traffic, revenues and profitability, increase in oil price and bankruptcies,
Qantas has undertaken significant changes over the last decade to cope with internal and external factors such as the terrorist attacks on September 11, 2001 which effectively reduced the demand for international travel. Qantas initially reduced its international travel flying capacity by 11%. Fortunately, the collapse of Ansett which halted domestic competition in the Australian aviation industry which had dropped the bidding price war for consumer finances, softened the blow on September 12, 2001.
The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B. Because the reasons can differ greatly in the motivations for a customer wanting to fly, it can be difficult to divide the market into discrete segments, that is, there is always going to be overlap in the preferences and characteristics of any given segment. With that in mind, the commonalities that are shared between the clientele that make up the respective classes can easily withstand analysis.
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 results of airline deregulation speak for themselves. Since the government got out of the airline business, not only has there been a drop in prices and an increase in routes, there has also been a remarkable increase in airline service and safety. Airline deregulation should be seen as the crowning jewel of a federal de-regulatory emphasis. Prices are down: Airline ticket prices have fallen 40% since 1978. Flights are up: The number of annual departures is up from 5 million in 1978 to 8.2 million in 1997. Flights are safer: Before deregulation, there was one fatal accident per 830,000 flights, now the rate is one per 1.4 million flights. So what's the problem?
According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).
The state of commercial aviation before and after the passage of the Airline Deregulation Act received much controversy from many different sides in the aviation industry. The Airline Deregulation Act caused many problems before and after it was enacted by the United States government. There were several possible courses of action. Two of these are included here as well as the problems and advantages of each. In conclusion, the rationale for the new law enacted by the government is presented.
Air travel began in the early 1900s and scheduled flights started in the 1920s (Harris). In the early years, the airline industry competition was nonexistent. The competitive environment changed dramatically over the course of the last century specifically when the industry underwent regulation and then deregulation. The future success of the airline industry depends on the ability to adapt with rapidly changing industry environmental factors.
Capacity in Europe exceeds demand, which leads to rate wars, equalling lower yields for companies. Economically, alliances lead to a greater control on capacity, therefore reducing competition and increasing yields. Alliances also reduce the near term possibilities of airport expansion. By code sharing airlines are able to not only split costs but to offer services and enter markets, they might not be able to do on their own. This leads to less aircraft at airports, therefore less space is required, and is another way in gaining access to prime airports, which can expand further. Another factor is the cost of safety; alliances can share these additional costs on joint services. Globalisation has played part by making it easier for airlines across the world to join forces. Social These are strong from an employer staffing perspective. Airlines in alliance/code-share can reduce costs by utilising only one airline's staff. September 11th 2001, contributed to a major downturn in the airline industry, accelerated, and accentuated the current trend. It negatively affected consumer confidence and passenger numbers subsequently reduced. Passengers resorted to land substitutes or in business teleconferencing.
Tom, Y. (2009). The perennial crisis of the airline industry: Deregulation and innovation. (Order No. 3351230, The Claremont Graduate University). ProQuest Dissertations and Theses, , 662-n/a. Retrieved from http://search.proquest.com/docview/304861508?accountid=8364. (304861508).
Air travel has grown in the past decade. Travel grew strongly for both leisure and business purposes. India will have nearly 800 to 1000 airplanes by 2023, it was estimated by Airbus. In spite of growth between 30 to 50 per cent in Indian aviation industry, losses of approximately 2200 crore is estimated for the current year.
Furthermore, there is evidence provided to show the successful growth of the organization, how this was achieved and how it has been maintained to date. In addition, the international strategies that were implemented display the foresight of the airline (Yashodha, 2012). Included in these studies are the external factors that also attributed to the success of AirAsia and the air line industry in general – Liberalisation being one of these key external factors. The study is concluded by showing how all of the factors analysed through the range of internal and external factors can attribute to the rise and fall of an organisation, and how every little aspect can make a huge difference.
1. Issues 2. American Airlines’ objectives 3. The airline industry 4. Market 5. Consumer needs 6. Brand image 7. Distribution system 8. Pricing 9. Marketing related strategies 10. Assumptions and risks
Macroeconomic environment: The airline industry has proven particularly sensitive to phenomena such as terrorist attacks, wars, outbreaks (SARS), drastic currency fluctuations, and the like. These phenomena tend to have a significant impact on the cost of fuel, overall demand for air transportation, tourism, etc.
One perspective of the traveler comes from survey results published by the National Business Traveler Association in late 1997, which represents corporate travel managers and travel service providers. The survey results indicate that record airfare increases have significantly impacted corporate travel programs. The increased airfare resulted in a significant reduction in corporate travel as well as an increase in advanced bookings for business travel, which both must equate to a monetary loss for the airlines. The survey results also mention that the higher airfares will prompt corporations to take drastic countermeasures, such as reducing the amount of corporate travel by up to 50% and redirecting business to low fare carriers. This clearly indicates the dissatisfaction with airfare increases.
Travelling is going from one place to another might it be by land, air or ocean. Due to technology advancement and globalization, the demand for travelling increases as it becomes a requisite to earn for some people and for business expansion. People often travel for pleasure, relaxation, business, and even for education and health purposes. As a result, tourism and demands for air transportation grow rapidly. This growth sees by different airlines as an opportunity to put up business in the Philippines and targeted a big size of market which are Filipinos. Airlines segmented its market into domestic/national or international flights, three general classes of flights; economic, business and first classes, and age.