Airline Industry Problems and Suggested Solutions Essay

Several strategic options were evaluated. Since the U.S. and much of the world was facing a

However, this move is not always a wise one because when an enterprise has fewer workers it would reduce its productivity which would mean more

Since businesses would have to pay more in salaries, they would hire less, or not hire at all.

The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).

Companies can just settle for fewer profits by absorbing the increase cost of their current labor supply instead of dismissing workers. This is one method might be the least popular method and the least used by firms. Using this approach decreases the company’s net profit. This method should only be used by firms in a strong financial position and there is no other approach that can be used.

This results in some workers losing their jobs. The majority of these workers will be those who are the least productive.

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

A drop in fares has been the best result of the Airline Deregulation Act of 1978. It has been the impetus for the increase in the number of flights, which in turn has spurred a drive for greater safety in airlines. But with the current airline market, this development has given us one negative. Since ticket prices have dropped to new lows, the realities of an industry which operates on such economies of scale dictates that only a few competitors have the capacity to operate within the market. This is not the desired effect of either political side on this issue, but it is an economic necessity with the environment that has been created, very similar to that of public utilities and phone companies.

Airlines must operate within a low-margin, high-fixed-cost environment, making profitability particularly sensitive to decreases in volume, either from environmental factors (e.g., the September 11,2001 attacks) or from competition. Moreover, the airline business is labor-intensive. Labor costs as a percentage of revenues ranges from a low of about 25 percent for the low-fare airlines to almost 50

The Airline industry has experienced continual problems with rising costs with both fuel and maintenance which has caused them to increase their fees to the consumers to pay for those rising costs. This paper will help explain what an airline such as Delta does to help alleviate such costs without forcing its consumers to flip the bill through high fees that consist of tickets, baggage fees and food. The costs of doing business in aviation today have spiraled out of control making it very expensive for both airlines and the

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).

This paper discusses the external economic factors affecting the strategic decision of airline industry and how this decision in turn, affect the market forecast of the aircraft manufacturing industry. Various business issues affect airlines operation either directly and indirectly, and

4. Several major airlines filed for bankruptcy. Many airlines significantly decreased their capacity, reduced their routes and postponed purchases of new aircraft. Some airlines reported a 50% reduction in routes and flight frequency. All these events provided opportunities for the low-cost carriers not only to increase the number of flights but also to introduce services on new routes.

Airline industry is a growing and a challenging industry across the globe and it is becoming more competitive on quality, pricing and most prominently safety in the contemporary world.

Classic Airlines consists of 375 aircraft that travel to 240 cities more than 2300 times per day with a workforce of 32,000 personnel. Classic Airlines’ revenue was in excess of $8.7 billion last year bringing in a $10 million dollar profit and establishing the airline as the fifth largest air travel company in the world. Despite good sales and profits, Classic Airlines has been receiving harsh criticism from their customers resulting in a 10% decrease in profit shares, reduction in customer loyalty, 19% drop in rewards customers, 21% reduction in flights and the lowest morale seen in recent years. Classic Airlines remains optimistic about customer flight travel but must find