Essay on Airline Markets

of the market during this period, were it not for its strong worldwide salesforce and the lingering

economy continues to improve (Neal E. Boudette, Jan. 2014). So far, pricing in the U.S. market has been trending upward, not falling. The “discipline” of major competitors has thus far helped in matching production to demand.

The airline industry has recently been focusing inwardly on revenue growth, yield management, and balance sheet strength. The permanent threat of terrorism creates an element of uncertainty when it comes to an airline company’s operations. There are significant challenges to implement effective security and risk management systems. Large investments in required infrastructures are correlated to these challenges (PriceWaterhouseCoopers, 2014). There is also a strong demand for public transport recently as a result of environmental awareness and congestion. Railroads have difficulty meeting this demand because of a limited infrastructure capacity. This public transport competes with roads for investment funds and many planning processes for railroad projects take a long time to deliver (PriceWaterhouseCoopers, 2014). The shipping subsector contributes an extreme amount to global transportation and logistics. It has been historically cyclical with volatility in vessel values, shareholder returns, and freight rates. The international economic and political environment also has a large effect on shipping. The business environment is challenging with a few specifics risks. Risks include increasing regulation, a risk

The following review of the literature commences with a discussion about the History of commercial Air Freight & Boom in the Aviation Logistics. This is followed by upcoming challenges in the aviation Logistics which underpins this study. Also the Effect of Air Cargo will be seen on Revenue and Profits for the Different Stakeholders in the Aviation Industry.

Northwest Airlines and American Airlines will be compared thoroughly in many aspects. Globalization, diversity, ethics and technology will be addressed in various ways. All four themes will be addressed through the strength, fit and adaptive ness of both company's cultures. The overall organizational culture of both Northwest Airlines and American Airlines will be clear.

The risk of entry into the airline industry by potential competitors is low due to the “liberalization of market access, a result of globalization. According to the IATA (International Air Transport Association), about 1,300 new airlines were established in the last 40 years,” (Cederholm, 2016). The cost structure of businesses in an industry is a determinant of rivalry. In the Airlines Industry, fixed costs are high, because before the organization can make any sales, they must invest in air crafts, fuel and service employees. These items come attached with hefty price tags. Industries that require such enormous amounts of start-up capital as predicted by many analysts

In 2008 the world experienced one of the largest economic crisis, next to the great depression of the 1930’s. The meltdown revealed the instability of the US banking system and led to the bankruptcy of investment firm Leimen brothers, and collapse of worlds largest insurance company AIG, which triggered a global financial crisis. International share prices tumbled, causing 30 million people to become unemployed and doubling the US debt. It was the start of a global recession and it was not an accident.

• 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

Eight years later and the United States is still recovering from the Financial Crisis of 2007. When housing prices peaked in the summer of 2006, the downturn of the housing market began. The first indications of the financial crisis were apparent in falling prices of the securities, and by July 2007 the price declines were outrageous. The events of this particular crisis can be divided into four major phases. The first three were much more severe, but the fourth phase finally started to show some improvement in the state of the financial situation in the United States.

| Economic 1. Downturn in the economy has negatively affected the manufacturing and construction sector – resulting in some clients going out of business, and having implications upon credit insurance 2. The financial system remains vulnerable to setbacks in both the global economic recovery

1. There are a few trends in the US airline industry. One is consolidation, wherein existing players merge in an attempt to lower their costs and generate operating synergies. The most recent major merger was the United Continental merger, which is still an ongoing affair, but has created the largest airline in the United States by market share (Martin, 2012). Another trend is towards low-cost carriers. In the US, Southwest has been a long-running success and JetBlue a strong new competitor, but in other countries this business model has proven exceptionally successful. The third major trend is the upward trend in jet fuel prices, and the increasing importance that this puts on hedging fuel prices and capacity management (Hinton, 2011).

However, the market was changing prior to the downturn in the economy. There were signs that problems were developing in the US economy long before the actual, obvious trouble got started (Berezin, 2005; Dignam & Lowry, 2006). While it was unfortunate that many companies ignored those signs or simply did not know how seriously they should have been taken, other companies were aware of the signs and focused on which direction they should take in order to ensure that they had the most protection from economic difficulty.

From the humble financial portfolio as a crop dusting outfit in the mid twentieth century, to the multi-billion dollar portfolio of a major airline in the twenty first century, Delta Air Lines has risen as a successful business. The airline industry is directly affected by outside economic conditions and is also cyclical in nature. These factors make it very difficult for airlines to make predictions to stay financially afloat. Delta has ridden the bumpy path of the last twenty years and managed to survive. In the past twenty years there has been many events that

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).

Air freight market is not stable and might be weak because of uncertain international trade increase (Barnard,2015). There was fluctuation in air cargo demand over the last 10 years from 2006 to 2016 which indicates that cargo demand could be changed by some external and internal influences. Some figures were released about worldwide air freight market and presented that air cargo capacity increased 2.2%, comparing to 2014. While this was the 5% growth calculated by The International Air Transport Association (IATA), the growth of cargo volumes in 2015 was much slower than 2014(Barnard, 2015). However, some experts pointed out that global air freight market get a positive growth from 2011, and it is enjoying a relatively steady growth, due to the enhanced trade and economic recovery after the global financial crisis of 2008(Huang,2016). Because of sluggish world trade growth, air cargo suppliers face a lot of challenges including alternative transportation, perspective uncertainty and unexpected policy and here are some potential solutions: improving customers service, efficiency, security and reducing negative environmental impacts.