Chaos in the Skies- the Airline Industry Pre and Post 9/11

2557 Words Oct 1st, 2011 11 Pages
Chaos in the skies - the airline industry pre and post 9/11

Case Study
Chaos in the skies- the airline industry pre and post 9/11 1. Introduction
The terrorist attack on the New York World Trade Center and the Pentagon on September 11, 2001, when civilian planes were turned into guided missiles flown by suicide bombers driven by religious fundamentalism and hatred for the United States not only seared themselves into the consciousness of the American people, but into the economic and business fabric of the country, and as a result, of the world.
While the United States economy was slowing in the months before this tragic event, the aftermath of the bombings led the economy into a depression.
The airline and travel industry were the
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3. Situation after 9/11 STEP
3.1 Social Factors
The attacks of 9/11 led to a declining of bookings of 74% of US domestic flights and 19% worldwide in the first four days. People were afraid of using air travel. Furthermore the longer check in times because of higher safety standards increased the door–to-door travelling time and customers were looking for alternatives such as video conferencing, using the car or the train. Furthermore customers were not willing to pay the prices they paid before 9/11.
3.2 Technological Factors
Airlines invested huge amounts of money into new security systems and safer cockpit doors the changeover of the aircrafts caused enormous costs.
3.3 Economical Factors
After 9/11 the economy was facing a recession. Stock market was completely closed for a week, sectors like insurance airlines decimated. Many airlines were facing bankruptcy. Furthermore insurances raised their premiums up to 500% which increased operating costs for airlines.
3.3.1 Competitive situation
Full Service Carriers suffered from the customers fear people avoided long-distance flights, also business flights decreased. To counteract the decreasing bookings and the demand for cheaper prices the Full Service Carriers introduced a dramatic cost-cutting program, including reducing employees. The Low Cost Carriers acted different from the Full Service Carriers, they started campaigns to rebuild the customers’ trust into flying and offered attractive and very cheap