Airline Industry Essay 15

1960 Words Jul 28th, 2008 8 Pages
The airline industry is a large and growing industry. Air travel plays a very important role in economic growth and world trade. It is expanding for either of the following reasons that is for business purpose or leisure travel. It helps in increasing the international investment as well as tourism. The airlines have made it more comfortable to travel from one place to another, and now are offering reasonable rates. Affordable rates encourage people to travel further to new places. As a result, people have started traveling to new exotic destinations. Billions of passengers are traveling every year by way of the airline industry. The airline industry is not only growing in developed countries but it is growing in developing countries also. …show more content…
In the year 2006, seat load factor recorded a growth of 76 percent. In the past five years, non fuel unit cost has dropped by 15 percent.
The main air travel market in terms of passenger trips will continue to be in and between North America, Europe and Asia. Events at the international level, affects the air travel business directly. For instance, during the first half of the 1990’s, the airline industry suffered a lot because of world recession. The Gulf War also affected the air travel during this time. Profitability of the airline industry is closely related to the economic growth and world trade. During 1990 to 1994, the member airlines of the International Airport Transport Association suffered cumulative net losses of $20.4 billion.
After this, the member airlines realized that if they want to survive and become profitable, it is essential for them to bring drastic changes. Without bringing changes, it is not possible for them to become prosperous. Many actions are being taken. Some airlines tried to cut costs, increase the load factors etc. Many airlines tried to reduce the capacity growth. These efforts helped a lot to the industry in gaining profitable position, which existed earlier. In the year 1996, the member airlines recorded a profit of $5 billion, which was only 2 percent less than the total revenues. According to the International Airport Transport Association, this profit level is not…