The Commercial Airline Industry Has Witnessed A Steady Increase Essay

The United States carries over one third of the globe’s total traffic, where Over 1.5 billion passengers fly annually. Over the past 20 years, air travel has grown at an average of about 5% per year, the reason for annual change is usually differences in economic growth, and of course other environmental factors, such as the current war. As a rule, the annual growth in air travel has been about twice the annual growth in GDP. Deregulation, liberalization, and competition have essentially altered the management strategies and practices of airlines. Productivity improvements and cost management have been two of the greatest concerns for US airlines for the past twenty years. As a whole, the airline industry must continue to improve their specialization in terms of fleet utilization, pricing and revenue management, and schedule optimization.

The airline industry has long attempted to segment the air travel market in order to effectively target its constituents. The classic airline model consists of First Class, Business Class and Economy, and the demographics that make up the classes have both similarities and differences to the other classes. For instance there may be similarities between business class travellers on a particular flight, but they will not all be travelling for the same reason. An almost-universal characteristic of air travel is that customers do not fly for the sake of flying; the destination is the important element and the travel is a by-product, a means-to-an-end that involves the necessity of an aircraft that gets the customer from point A to point B.

At the present time, the airline industry faces many cost pressures. The industry has made remarkable achievements in improving its efficiency. But cost pressures continue, from record high fuel prices to unjustified increases in charges from monopolistic airports, to further taxes imposed by governments (industryspotlight.org.uk). Higher costs inevitably lead to higher prices for airline passengers. Aviation is vital part of the United Kingdom. It is not only crucial in sponsoring almost 1 million jobs and £50 billion of GDP, providing around £8.7 billion in taxes to the Treasury of the country, but aviation is also fundamental to the success of economic benefits from air transport in the United Kingdom (Roberts-Hughes, 2014). Aviation supports exports, services, manufacturing, foreign direct investment and of course tourism. This sector gives us opportunity for the holidays and visits of family and friend in different parts of a country and also around the world.

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).

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

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.

After six consecutive years of profitability, the U.S airline industry was descended into a downward spiral. The number of passengers flying dropped from 56 million in August 2001 to 30 million in September with no passengers for two days after the attacks (Poling). It took three years for the airlines to reach the 56 million passenger mark again. The impact on the travel industry, specifically the airlines, was more severe than in other areas.

airline industry has never matched the profitability of even the average U.S. corporation (ATA Report, 2007). In its “”FAA Aerospace Forecast Fiscal Years 2008–2025,” the Federal Aviation Administration (FAA) reported on the industry’s 36 mainline air carriers that use large passenger jets (over 90 seats) and 84 regional carriers that use smaller piston, turboprop, and regional jet aircraft (up to 90 seats) to provide connecting passengers to the larger carriers (FAA, FAA Aerospace Forecast Fiscal Years 2008–2025, A Review of 2007), stating that “three distinct trends have occurred over the past several years that have helped shape today’s U.S. commercial air carrier industry: (1) major restructuring and shrinking by the mainline network carriers; (2) rapid growth by low-cost carriers, particularly in nontraditional long-distance transcontinental markets; and (3) exceptional growth among regional carriers.”

The modern day airline industry is a highly complex and dynamic industry, characterized by numerous elements. For instance, the airline industry is now, unlike its inception period, populated by privately owned companies, rather than state owned enterprises. Then, the airline sector is marked by high levels of financial resource consumption, employment concerns or pollution complaints.

This industry is heavily saturated with intense and rapidly evolving competition due to the relative ease of entry into the market. This accounts for why there are hundreds of airlines ranging from prominent well-known ones to virtually obscure and obsolete airlines. There are six primary airlines which compete fiercely and maintain the majority of the market share and total volume. The remaining fraction of the market share is then sub-divided and allocated amongst the hundreds of smaller, less relevant airlines. The only notable trend within the industry seems to be a total lack of consistency, as market shares and profits fluctuate regularly during any given time period.

The key technological factors that contribute to easyJets’ operations is the technological advancements which they try to integrate into their own systems such an example would be Galileo and Amadeus, which in turn makes online bookings more efficient and effective. (Bing, 2007).

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

The airline business is a highly competitive industry. According to Morningstar article Southwest Airlines Co Analyst Report, the airline industry has many barriers to entry, which creates an intense industry rivalry. This claim is backed up by the text Attention All Passengers by William J. McGee, which states “Air travel has become a commodity, and the airlines themselves an oligopoly.” (McGee) Therefore, a sustainable cost advantage is the only way to survive in this cutthroat industry. (Dihora) Furthermore, the same Morningstar article claims that the airline industry is not growing. This is because the top four airline carriers control approximately 80% of the domestic market in 2015. This can be compared with results from the year 2000, when around 9 carriers controlled as much. (Dihora) This statistic shows that the number of organizations in the market is in fact

The airline industry is governed by a rapidly evolving framework of economic regulation by which many factors, significantly continued liberalisation and open skies, have caused much turbulence and uncertainty in this increasingly low margin market.

According to (Ramchandi 2015), last March there was an increase percentage of demand passengers with an average of 12 percent in the Asia Pacific region and it describes the Asia Pacific airlines recorded the strongest increase of passengers. Most of the civil aviation members both internationally and domestic agreed that the Asia Pacific states as fastest growing travel and transportation region in the world. Since they are now the largest region of passengers in the world, there are chances that they provide a framework plan for better infrastructure development in airlines particularly more on high quality maintenance and engines for high standard safety. The question is how the Asia Pacific made it successfully, reaching a billion dollars profit from Asia Pacific airline companies. Why people travel and what are their relationship between an airline and in a destination? There are some purpose why people travel but we must understand also why some passengers choose to book an expensive flight. Not all, majority of the passengers prefer to book a flight in low cost airlines. For instance, it is necessary to think and understand why Asian travellers love to travel and their purposes to visit in a destination. Travel demand refer to the amount number and type of people who are seeking for an experience and outstanding service from the airline and the destination that they’re going to visit that would purchase at a given price and quality. International Civil Aviation