Analysis and Recommendations for the Airline Industry

3140 Words Oct 14th, 2009 13 Pages
The United States airline Industry is a complex business that is affected by many internal and external factors. The successes and failures of this industry are constantly fluctuating over time. While deregulation brought great triumph and positive change, the tragedy of 9/11 was the initial factor leading to the downward spiral of failure that the current airlines face today (Siddiqi, 2009). Currently, the International Air Transport Association reported that the airline industry suffered a net loss of $8 billion dollars during 2008 (wikinvest). The current failures are most affected and influenced by competition, buyer power, technology, and the economy. While it is evident that the airline industry is suffering as a whole, there is one …show more content…
(cq) With separate airlines sharing similar interests the competition among the airline industry will decrease. Some of the most successful airlines in the United States that have participated in such partnerships include Delta, American Airlines and US Airways.(IBIS)SuccessIn the current state of the airline industry, one aspect of competition that is extremely relevant is the threat of the successful airlines who operate with a low-cost low-fair method. Southwest airlines primary focus is to overcome their competators by providing lower fairs, one class flights, and point-to-point flights (understanding ebusiness). This strategy has brought Southwest a net income of $178 million in 2008 (southwest fact sheet). Southwest has been more successful than any other of its competators in the past five years. (see appendix).

BUYER POWERBuyer Power is a very significant aspect of the United States airline industry. This refers to the amount of pressure the consumers put on an industry that affects the prices, volume, and profit potential. (Porter, M 1998, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, Texas) The industry is highly competitive and therefore there are many different choices of airlines. Many airline companies exist in the market, however, each of these companies do not differ much from one another. Each company is virtually offering the same service to the consumer so the main aspect affecting buyer behavior in the industry is

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