Us Airline Industry Analysis

1507 Words7 Pages
------------------------------------------------- Name: Steve Thaxton

Assignment: #3 Industry Analysis

Term: Summer 2013

Course: Strategic Marketing

Global Airline Size
The 2013 global passenger airline industry is estimated to be a $539 billion industry with an additional $68 billion generated by these same firms through cargo transport9. The key measure of units for the industry is expressed as revenue passenger kilometer or RPK. This is defined as the actual kilometers flown by revenue paying passengers 10 and is estimated to be approximately 5.6 trillion for 20136. A final primary measure of the industry size is scheduled number of passengers. This is forecasted to be 3.1 billion9. These passengers are
…show more content…
Most dramatically, this consolidation has occurred through mergers which have created four dominate players controlling more than 75% of the total addressable market3. These include: Delta (with Northwest), United (with Continental), Southwest (with Airtran), and American (with US Airways). Additionally, establishment of partnerships and alliances have been utilized to create competitive advantage through cost sharing and increasing flexibility3. Major examples include the Star Alliance of United, US Airways and Continental and the Sky Team Alliance of Delta, Northwest and Air Alaska4.
With continued competitiveness and cost efficiency improvements, today’s mean airfares remain at approximately half of 1978 fare values4. This has led to a significant market share shift from the legacy majors operating hub and spoke strategies to low cost carriers operating point-to-point strategies. Low cost carrier share has increased fourfold throughout the first decade of the 2000s now comprising more than 25% of the total market3. Airtran, JetBlue and Southwest are clear examples of players succeeding at this type of strategy. With low-cost carriers operating at utilizations as much as 46% higher than legacy majors and employee cost per available seat mile as much as 25% below, network carriers have had to utilize Chapter 11 or the threat of it to
Get Access