Airline Industry Analysis 2

The airline industry has been a major factor in the globalization of the world economy. It connects the sellers and the buyers as well as transports goods across countries. It also breaks the time and distance barriers. In the past, air travel was considered a luxury but it is now a common necessity.

The Airline industry today offers services to nearly every place of the globe. The following economic factors that include consumer behaviour, currency rate, purchasing power of consumers, oil price plus the inflation plays key role in deriving the country’s economy. According to (Macmillan & Tampoe 2000), Airline industry itself is a leading economic force in terms of both its effects on associated industries for example aircraft manufacturing, operations and tourism. In this regard, this paper discusses the economic factors that affect the decision, the board of Air Asia needs to consider before acquiring 10 units of Air Bus model A350-1000 to increase its fleet of long haul airplanes.

In today’s business industry, the globalization process has become an important aspect and fundamental force. The elements that contribute to globalization is the environment, culture, regulation and technology and production. While the advancements globalization has increased greatly, so has the advancements in airline industry with their aircraft (Shevell, 1999). Globalization also provides a great amount of potential profits to nations and their corporations (Button, 2008). Air transportation has evolved into a major industry (Kroo, 1999). The airline industry’s continuously grows and is facilitated through its international investment, tourism, world trade and economic growth (Kroo, 1999).

Rising fuel prices has a huge impact on the airline industry. In an article published by the New York Times in 2007, oil prices were hovering ‘near $100 a barrel’ which caused the International Air Transport Association (IATA) to ‘slash’ their predicted profits for 2008 from ‘$7.8 billion to $5 billion’ (Clark, 2007). In 2008 high fuel prices were ‘dominant factor’ in the losses that faced the industry, and continued to same effect in 2009 (Dunn, 2009). Diagram 2 shows how fuel price has increased and fallen over the last 5 years.

• Provide background on the global industry • Present a regional analysis • Discuss current and future evolvement of the industry (trends) • Discuss challenges and strategies impacting the industry • Discuss the new breed of airlines • Discuss why airlines fail and how to achieve success

Air travel is one of the largest growing industries in the world. Activities such as world trade, economic growth, international investment, tourism and cargo services are central to the globalisation that is taking place in other industries. Air travel for business and leisure purpose has been experiencing a significant growth worldwide.

The airline industry is greatly influenced by the the travel and tourism trends across the globe. The World Travel and Tourism Board states that the the level of tourism is likely to grow even as the years progress. The growth in the level of tourism is expected to grow at a level of 4.5 per cent annually. This is expected to continue upto 2017. Thus the organization should fully prepare it self and take over the tourism market.

The International Airlines industry will benefit over the next five years, as the number of tourists significantly rises up every month. Especially, there are more and more people from China are visiting Australia, which will provide Qantas with a great revenue. However, the competitors of Qantas, with low-cost tickets, can have a big pressure on Qantas and lead to decrease in price. Although, there will be a greater demand from Australians and international travellers to purchase tickets from this industry. The demand of the company is planning to rise at an annualised 1.2% over the next

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

Since the airline industry is a direct product of market conditions, it is greatly affected by all externalities. Many people noticed a decline in travel after the September 11th tragedy occurred due to safety concerns. When there is a huge increase in fares that definitely interferes with the demand for travel; it causes the price of tickets to continue to rise since a clear correlation between supply and demand exists. When the economy is doing well in terms of the employment rate, and when the dollar is strong people have the tendency to travel more (Jerram,1998).

The implications of this analysis are that the focus on the Chinese market is justified. The Chinese air travel industry is booming, and indeed this is fueled by that country's rapid growth and the increased demand for

The growth of airline industry in any country is directly proportional to its GDP growth; the greater the business activity, the more air travel and the higher the GDP of the country. The demand

Using the sky has been a dream of mankind since ancient times, there were countless experiments conducted in human history, aviators had flown hot-air balloons and blimps in 1800s, but not any heavier-than-air flights (Curry, 2003). On December 17, 1903, the Wright brothers made the first manned propeller aircraft with an internal combustion engine which opened the new era of aviation. During two World Wars, many innovations and equipment had advanced aircrafts and their capabilities, other than the military uses, federal air services (e.g. U.S Post Office air mail), cargo services (e.g. Ford) and passenger service airlines had emerged during this period. With the passage of the Airline Deregulation Act in 1978, it opened a new chapter for the airline industry (Air Transport Industry, 2014). Thought out the past 110 years, the airline industry progressed with technology aspect as well as the economic aspect; recessions, economic downturns and oil crisis have impacted the industry (Zarb B. , 2014).

has a high sensitivity to the economic cycle (Doganis, 2006). The profit margins of the airline

Part 1 The Characteristics Of The Airline Industry Preface Introduction The Primary Characteristics Competition Within The Airline Industry The Secondary Characteristics – The Tertiary and Quaternary Characteristics – Part 2 PESTEL Of The Airline Industry Conclusion References PART 1 The Characteristics Of The Airline Industry Preface Economics or Managing In The Global Environment, a subject everyone needs to be familiar with and most believe or think that they are, but at the end of the day, very few are competent and understand it’s deep meaning, intricacies and implications. These implications and meanings are for the Government, the people, the economy as well as for the observer ( a person observing the economy or industry in a