Airline Industry Problems and Suggested Solutions
The airline industry has over the past few months gradually been going into recession. This has been due to a number of factors, all affecting the industry in a negative manner at the same time. This has resulted in low profits and poor performance. The decline in the industry sharply increased after the terrorist attacks on the United States, increasing the urgency to clearly identify the causes of the problems faced and to find any solutions available to overcome them.
One of the factors contributing to the poor performance has been the global economic slowdown whose effect has not been limited to the airline industry but has extended to many other industries. The effect of this economic slowdown on airlines has been to cause a slowdown in air travel.
The terrorist attacks on America have also done a great deal in causing a further decline in air travel, as consumers lose confidence in the airline industry, after fears of low security and becoming targets of terrorists.
However, airlines have also been suffering from a number internal conflicts. The most important of these has been the recent bad relations they have had with pilots. Pilots of several companies have gone on strikes and threatened further strikes in demand of higher pay. These strikes have resulted in delays for passengers and congestion in airports. Such actions have lead to huge falls in the level of revenue expected by many airline companies....
For starters a few days before the attack on 9/11, the airlines stocks did go up. Which means the supply and demand was greater. America was making more money, which is good. The airlines that stocks markets went up, were the airlines that were hijacked which than lead to them going bankrupt. Gabi Logan was saying on USA today “ Despite this government-funded measure, several prominent American airlines declared bankruptcy not long after the 9/11 attacks.” Due to bankruptcy more than just money was
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.
Ever since that fateful moment, citizens in America are on their toes every day worrying about another attack happening. United States citizens have had to adapt and change in response to this fear of further terrorist assault on our country. One of the ways they have adapted is by changing their means of security concerning airline travel. Before the attacks on September 11th, Americans were under the assumption that an individual or group of individuals could not do such a devastating thing to humanity. Prior to 9/11, there was a lack of security in airports and on airplanes.
Southwest Airlines is operating in an industry that is struggling to make profits. The slowing economic growth and raising fuel costs are lowering earnings while revenues remain the same. The macroeconomic factors affecting the airline industry include unemployment, the economic growth in the United States, and inflation. With low economic growth, consumers are finding luxury items more difficult to purchase and airline tickets for vacations fall into that category. Unemployment contributes to a lack of vacation travelers since individuals who are not employed do not have extra money for vacation or airline tickets. Inflation also causes operating costs of the airlines to be higher cutting into profits.
Whether we would like to admit it or not there was a time, prior to September 11, 2001 when airline terrorism was a very real danger and it seemed as thought we averaged a hijacking or terrorist event every thirty days somewhere in the world. Gladly this wasn’t the case, in an online article I read there was a interview held with a person who spoke to my thoughts, he said “One example was a study I conducted on media coverage by the New York Times during a 17 -year, pre-9/11 period of 1978 to 1994. Among other things, I found that fatal airline events that involved jet aircraft that were hijacked, sabotaged, or destroyed by military action, which represented about 8% of the fatal airline accidents reported by the Times during that period, accounted for about 48% of all the airline accident articles in that period“ (T. Curtis, personal interview, September 11, 2009). Back then, it was easy to visualize a small suitcase being carried aboard an aircraft with a explosive inside, capable of ending the lives of everyone onboard men, women, and children; with no regard to age, sex, and religion.
The pros of an airline implementing a policy that bigger customers need to buy a second seat is that the weight capacity regulations will be followed to. As well as the cons of an airline implementing a policy that larger customers need to buy a second seat would result in a bigger people who travelling will not uses that airlines anymore, airlines would be glowered on by family or relatives of larger customers, airline’s policies could be vigorously monitored for discriminatory actions against overweight persons. As mentioned in the book there are no federal laws prohibiting discrimination against obese individual, although there are some places such as Wisconsin, DC, and California provide legal protection. (Harvey & Allard , 2012, p. 234)
Along with the low stock index numbers of September 17th, the airline industry and travel stocks were also rocked. One of several airlines announcing layoffs, US Airways said that they would be terminating 11,000 jobs. These heavy losses were contributed to airlines “being grounded last week [week of September 11th], plus passengers have been apprehensive to fly, in the wake of the hijackings” (Stock Markets Reopen 1).
The immediate financial repercussions of the terrorist attacks were astronomical. Makinen (2002) reports airlines received a $15 billion federal aid package. Additionally, insurance ...
When the attacks of September 11th occurred, the federal government had to completely close down some airports in the US. This created a negative effect on the industry as it was a shock to their entire organization. Planes in the US and around the world were canceled due to this attack as well. Planes were not flying anywhere, as the plan was to prevent any other attack. Each plane that was cancelled had to be paid by the airline company directly. According to the International Air Transport Association there was a drastic change in the amount of flights between the date before and after the event. Around 37,600 less flights flew the day after the attack had occurred. The number of flights dramatically decreased in those three days; in addition every...
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.
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).
Southwest Airlines: A Case Analysis. ORGANIZATIONAL ANALYSIS It is evident that the greatest strength Southwest Airlines has is its financial stability. As known in the US airline industry, Southwest is one of those airlines who are consistently earning profits despite the problems the industry is facing. With such stability, the corporation is able to make decisions and adjust policies, which other heavily burdened airlines may not be able to imitate.
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).
The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers. An unstable political environment causes uncertainty in the minds of the air travellers, regarding travelling to a particular country.
Several weaknesses in airline operations were identified as the causes of the RM1.3 billion loss. These included esclating fuel prices, increased maintenance and repair costs, staff costs, low yield per available seat kilometer ("ASK") via poor yield management and an inefficient route network.