Airline Industry Problems and Suggested Solutions
The airline industry has over the past few months gradually been going into recession. This has been due to a number of factors, all affecting the industry in a negative manner at the same time. This has resulted in low profits and poor performance. The decline in the industry sharply increased after the terrorist attacks on the United States, increasing the urgency to clearly identify the causes of the problems faced and to find any solutions available to overcome them.
One of the factors contributing to the poor performance has been the global economic slowdown whose effect has not been limited to the airline industry but has extended to many other industries. The effect of this economic slowdown on airlines has been to cause a slowdown in air travel.
The terrorist attacks on America have also done a great deal in causing a further decline in air travel, as consumers lose confidence in the airline industry, after fears of low security and becoming targets of terrorists.
However, airlines have also been suffering from a number internal conflicts. The most important of these has been the recent bad relations they have had with pilots. Pilots of several companies have gone on strikes and threatened further strikes in demand of higher pay. These strikes have resulted in delays for passengers and congestion in airports. Such actions have lead to huge falls in the level of revenue expected by many airline companies.
Another problem faced is the short supply of skilled labour available. This has been largely due to the fact that governments had previously subsidized pilot training. But after the demand for military pilots declined, there were cutbacks. Pilot training is now no longer subsidized, forcing pilots to pay for their training. This has a high cost of approximately $70 000.
Action must be taken to solve these problems to prevent more damage to the airline industry. The first step that companies should take is to try and deal with the losses they are making by reducing their costs as much as possible. There are various methods of doing achieving this.
Job cuts could be made. This would reduce the cost of wages paid by the companies. However this may be met with opposition from employees. They may take industrial action to help and show support for their fellow employees that have been made redundant. Morale may also come down, as employees no longer feel that their jobs are secure.
Companies could try to cutback on the number of planes used. This would reduce the cost of fuel and maintenance. The companies could also raise money through the sale of these unused plane and other assets. But this would mean that some...