The air industry is a vital part to America’s transportation system. Being that flying is known to be much safer than ground transportation, many people choose to fly rather than drive. With choosing to fly instead of drive individuals also are choosing to pay for the particular service. Every mode of transportation comes with a cost; the air industry is no different. Included, will be why individuals choose to fly, what expenses and costs the air industry has to face, along with how certain costs such as fuel affect ticket prices and the patrons. People are choosing to fly over driving for many reasons but safety is a main reason. According to Kenneth Button, “air transportation has continually improved over the years in terms of both mortalities …show more content…
These circumstances include time of year, time of the week, time of day, and the departing and arriving destinations. It is of no surprise that ticket costs go up around holidays. Also, choosing to fly on weekends tend to raise ticket prices as well. Airports play a huge factor in the price as well. Typically, larger airports offer lower price, but the small regional airports cost more. A lot goes into determining the cost of airline tickets and that is why it is always in a constant flux. Airports require upkeep while the different airlines are trying to make a profit. The most common cause for the changing in ticket prices that is not listed above is the cost of fuel and …show more content…
Flying can be so more convenient. The air industry offers many different things to accommodate every individual. People choose to fly to avoid traffic, to avoid responsibility and for just overall comfort. Although the cost of flying compared to driving may be more expensive. The patrons will still choose to fly. Air industries have notice this trend but are making small changes that could possibly lose customers. Airlines are adding more seats to their aircrafts cutting down on personal space while also charging more money for other products such as food and drinks once individuals get past security. Although a few of negatives are being developed within the industry many people are still getting great
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.
Many people have issues with flying. Some are nervous that the plane might not make it to its destination while others think of flying as an overpriced, uncomfortable, and unpleasant experience. Than there are those who can afford to make their flight experience much more luxurious which are the passengers flying in business class or in first class. These are passengers that get the champagne in the plastic glasses and the chairs that stretch all the way out. David Sedaris is able to paint this picture of entitlement and lack of comfort throughout his article “Journey into Night.”
of price versus service in the airline industry as a whole, as well as, the
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...
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?
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.
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 complements such as TV screens, Wi-Fi Internet capability, and comfort aboard the airplane do influence customers. However, people prefer airplanes because of the length of time to reach their destination.
The Five forces in the airline industry can be easily broken down, firstly the threat of new entrants. Over the last 10 years there has been a huge influx of new low cost companies in Europe such as “Easyjet”, or “Ryan Air” as the low cost niche slowly becomes more full we are seeing less and less entrants since the market has become saturated. The better an airlines brand image, such as British Airways being a recognised name and the use of frequent flier or airmiles schemes the less likely a new entrant with lower prices will be able to break into the market. Next we have Supplier and buyer power in the industry. In terms of the suppliers of aircraft the main two are Airbus and Boeing and so it may seem that this few suppliers would have a lot of power over the airlines, but intact it tends to just increase the competition between the suppliers as they fight for major contracts with the big airlines. The bargaining power of customers in the
Lower prices draw a larger audience. When tickets are inexpensive and in high-demand, audiences are drawn to that event, thus creating a
The demographic environment includes the study of human populations in terms of size, density, location and other statistical information (allbusiness, n.d.). Airlines look to airports that are situated in cities or population with high density. Airlines have the need to serve airports and markets where they can generate sustainable levels of traffic and yield (IATA, 2013). This is particularly true as the airline industry is already highly competitive and coupled with competition that drives lower fares for customers; the need to operate in an airport that revenue potential for airlines is crucial. Population density is one of the factors that affect the choice of airport for airlines. Southwest is a LCC that serves dense, short-haul markets on a point-to-point basis with frequent service (Dresner, Lin , & Wi, 1996). A strategy that LCCs can adopt when expanding is to look out for markets with high density and high GDP and tap on the latent demand of the middle class. Ryanair has been successful in seeking out markets with high density and GDP ( Ryanair, n.d.). Ryanair’s strategy is to attract the latent demand for extra flights distinctive of the middle class, which is especially concentrated in high GDP areas as they are more willing to spend money on leisure trips, while still being price conscious (Malighetti, Paleari , & Redondi, 2009). The decision to serve a market is crucial to airlines as it has fixed costs that c...
The main threats to the industry over the next five years are the rise in oil prices, legislation, the TSA, and labor costs. Each of these threats affects the scheduled air transportation industry, not only endangers Delta Airlines, but the entire industry. As the price of labor increases for ground operations and pilots, this creates a burden on the industry by causing them to spend more to satisfy their labor requirements. The price of fuel increasing leads to the price of fuel increasing, which not only affects a single airline, but every airline. With each time that the crude oil price rises, the prices associated with the costs of refining the jet fuel as well as transporting it.
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...