Airline Industry Research

Airline Industry Research

William Ward

Axia College of University of Phoenix

ECO 205

Lydia Portee

August 3, 2008

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Introduction

A Southwest Airlines Boeing 737 aircraft parked on...

English: A Boeing 747 of Pan Am at Zurich Airport ...

United Airlines

The airline industry is highly sensitive to economic cycles, and throughout its history there have been many economic difficulties. Through inflation, skyrocketing fuel prices, terrorist activity and much more the Airline Industry has taken several set backs and still managed to survive. While their financial performance has fluctuated somewhat, the U.S. Airline Industry can claim a steady growth, competitive prices and overall stability. Airlines have also contributed a great deal to the country's economic system. Much like any other business, the success and failure of the industry is dependant largely on the economy in which operates. Currently, the U.S. airline industry is facing a financial crisis and the outlook is not optimistic. Much of the current instability in the airline industry can be traced back to the devastating events of September 11th 2001. The public's confidence in air travel was shaken, which resulted in fewer travelers. Adding to this already unstable situation has been the escalating fuel prices and labor conflicts. Each of these factors has played a major role in creating an unstable airline market.

Airline Industry

In an already intensely competitive market, another factor that contributes to the decrease in air travel is that more passengers continue to look at "deals" and cheap fares. Nearly 80% of business travelers are stating that their company has implemented travel policies that among other things, place restrictions on the class of air service. These factors have the airlines struggling to find new way of attracting business travelers. Airlines are now in the commodity business as the public demands low-priced transportation. Today's travelers know how to surf the web for bargains through...