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Current Market Conditions Essay

2752 words - 11 pages

Current Market Conditions PaperIn this paper he or she will find an analysis of the current market conditions for the airline industry. The learning team will cover the airline industry's market structure, prices, and competitors, impact of government regulations, and a couple other topics. Team D will also cover some of the issues and or opportunities that the airline industry faces.Market StructureIn the United States the airlines are classified by the government on the basis of the amount of revenue generated from operations. These classifications are major, national and regional. All United States airlines hold two certificates from the federal government, a fitness certificate and an operating certificate.To be called a major airline, the airline must generate operating revenues of more then one billion annually. The airline generally provides nationwide and in some cases worldwide services. With economy today several major airlines have had to fill for bankruptcy. The United state has nine major airlines; America West, American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, Southwest Airlines, United Airlines and USAir. All nine of the major airlines carry both passengers and cargo. The United States does have three major cargo only airlines. They are DHL, FedEx, and the United Parcel Service. (Structure of the Industry)To be considered a national carrier the airline must operate with annual revenue between $100 million and one billion. Many of the airlines in the category serve particular regions of the country. A few examples of a national carrier in the United States are; Mesa Air, Midwest Express and Hawaiian. (Structure of the Industry)The third type of airline in the Unites States is the regional airline. Most regional airlines fly passengers between small cities and major cities. Most regional airlines fly the smaller jets or even prop planes. Regional airlines are divided into three groups; small, medium and large. The biggest divisions of regional airlines in the small regions sometimes call commuters. To be in this division the airline can not operate any aircraft over 61 seats. This airline also does not have to require a fitness certificate from the government; however, the airline is required to register their services and make certain annual reports to the government. (Structure of the Industry)Impact of new companies entering the marketWhen new airlines come on board one of the first things the major airlines try to do is match the cost of flights. When this happens a pricing war starts between all carriers. In today's economy the airlines are struggling, therefore, when an airline goes into a price war, extra stress is put on the budgets. However, pricing wars are good for the consumer in the beginning, but when pricing goes backup the airlines are trying to make up for the resent loss.PricesToday, the airline industry is facing unprecedented challenges worldwide. These days ticket pricing is directly...

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