Latin American Airline Industry

The airline industry has been a major factor in the globalization of the world economy. It connects the sellers and the buyers as well as transports goods across countries. It also breaks the time and distance barriers. In the past, air travel was considered a luxury but it is now a common necessity.

During the Second World War, Pan American operated many services for the military. In the postwar era, Pan Am reopened its Pacific and Atlantic routes (Banning). In 1947, Pan Am became the “first airline to operate a scheduled round-the-world service” (“Family Tree: Pan Am”). However, “by the mid-1950s, major expansions were over” (Banning). In 1968, Trippe announced his retirement as president of the company. This signaled the beginning of the end. In the 1970s, there were major increases in worldwide fuel prices, and declining travel, followed by deregulation and huge increases in competition” (Banning). Increased world terrorism, which culminated in the crash of Flight 103 in December 1988, which was “blown out of the sky over Lockerbie, Scotland, by a terrorist bomb,” left the company in financial instability and moral turmoil (Dallas and Gellene). Even after selling most of its assets, “many at bargain-basement prices,” the deficits remained” (Banning). Pan Am’s declaration of bankruptcy on December 4, 1991 signaled the end of the company (“Family Tree: Pan Am”).

Ten company’s bids for the 12 contract airmail (CAM) routes established throughout the United States. These companies included, Colonial Air Transport founded by Juan Trippe, whom later founded Pan American Airways, Robertson Aircraft Corporation the forerunner to American Airlines, National Air Transport that later became United Airlines, and several others that would become well-known airlines of today. Many improvements to aircraft design were a result of this bill, these improvements led to better engines, better cargo capacity, and overall more reliable aircraft.

Most agreements permit airlines to fly from their home country to designated airports in the other country: some also extend the freedom to provide continuing service to a third country, or to another destination in the other country while carrying passengers from overseas. In the 1990s, "open skies" agreements became more common. These agreements take many of these regulatory powers from state governments and open up international routes to further competition. Open skies agreements have met some criticism, particularly within the European Union, whose airlines would be at a comparative disadvantage with the United States ' because of cabotage restrictions.

One of the most important events in the U.S. aviation history and in particularly commercial aviation is the Airline Deregulation Act of 1978. With the signature of the act by Jimmy Carter started a new beginning of a never seen before airline approach in the United States. This new approach did not just changed the way passengers experience airline aviation with the freedom of pricing and routes, but it affected as well other areas such as aviation safety and employment. Its creation encouraged development by relying in a competitive market that was going to determine the variety, quality and price of air services. Before the act came into effect, the Civil Aeronautics Board (CAB) controlled factors such as: routes, ticket’s prices and charters

On October 17, 2015, two of the largest airlines officially became one after two years of negotiations. These negotiations came under great scrutiny, whilst pulling one airline out of Chapter 11 bankruptcy. Continuing to use the American Airlines name, U.S Airways and American Airlines became the largest airline in the world.

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.

The following report of American Airlines and United Airlines, two American based airlines, analyzes and compares the composition of their respective fleets. These two air carriers are major airlines in the United States. Both airlines serve domestic and international flight, and since the year of 2006 have merged with other airlines. The report compares the aircraft inventory and age for American Airlines and United Airlines from the year 2006 until 2015, and incorporates the airlines that have merged with these in the time frame. The analysis utilizes data provided by the Massachusetts Institute of Technology through their Airline Data Project, as well as data gathered by the Bureau of Transportation Statistics.

1. Political: “In some cases, foreign governments limit U.S. air carriers’ rights to carry passengers beyond designated gateway cities in foreign countries.”

Another emerging trend in the past five years has involved the progress made on open skies agreements between the United States and other countries. Open skies agreements serve to liberalize Orlando International Airport transport markets between the two signing countries or parties in the agreement. These agreements remove government restrictions, such as limits to the number of flights any one airline is allowed to operate per week between countries. The removal of these limitations has opened some routes up to increased competition, by allowing Orlando International Airport to fly more frequently and making these routes more accessible. Orlando International Airport could not previously justify the capital expense of operating on routes with limited flights are now able to profit on routes with high demand.

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.

Operations in international and/or foreign countries will create significant operational challenges. Differences in governing laws and regulations for the airlines industry, business, and employee relations will become challenging. Interpretation and intent for various laws can and will provide ambiguity that must be dealt with. Research shows that various international airlines continue to be plagued by high costs and poor service (Ramamurti & Sarathy, 2007).

The growth of airline industry in any country is directly proportional to its GDP growth; the greater the business activity, the more air travel and the higher the GDP of the country. The demand

Open skies is an international policy concept which calls for the liberalization of rules and regulations on international aviation industry most specially commercial aviation - opening a free market for the airline industry. Its primary objectives are: