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Analysis And Recommendations For The Airline Industry

3119 words - 12 pages

The United States airline Industry is a complex business that is affected by many internal and external factors. The successes and failures of this industry are constantly fluctuating over time. While deregulation brought great triumph and positive change, the tragedy of 9/11 was the initial factor leading to the downward spiral of failure that the current airlines face today (Siddiqi, 2009). Currently, the International Air Transport Association reported that the airline industry suffered a net loss of $8 billion dollars during 2008 (wikinvest). The current failures are most affected and influenced by competition, buyer power, technology, and the economy. While it is evident that the airline industry is suffering as a whole, there is one airline that is flourishing with achievement amongst the failing industry. Southwest airline's unique way of operating has generated a consistent profit throughout the most influential factors that affect the industry.COMPETITIONRivalry among competitors within the airline industry is an extremely important aspect. With more competition within the industry, consumers will experience more benefits. Advantages such as lower ticket prices and less competition will cause potential financial problems for the consumers. As many of the major competitors within the industry actively take steps to overpower other airlines, we as consumers may begin to feel the effects.Major Players in the IndustryThe domestic Airline Industry consists of many different competitors, some that are more successful than the others. At the current time the leading competitors in the United States include Delta Air Line, American Airlines Corporation, United Airlines Corporation, Southwest Airlines Company, and US Airways Group Incorporated. These five Airline companies make up nearly 50% of the Market Shares within the Industry with Delta owning the largest portion of the market shares. Of these five Airlines, the only one that has been consistently profitable within the last five years is Southwest Airlines. The other major US airlines have proven to experience unstable profitability. (IBIS world)Mergers and alliancesWithin the past years airline companies have begun to strategize on ways to be more successful against their major competitors. Due to the rising prices of fuel, the costs associated with operating an airline have continued to increase. One action airlines have decided to take is to merge with other competitors. This action is one that can increase profitability and the airline's long term finances by eliminating duplicated operating costs. (gao gov) The most recent merge in the U.S. is that between Delta Air Lines and Northwest which took place in 2008, making it the only alliance in the United States to include financial integration (national academic press). (IBIS world) The merge successfully helped Delta become the largest provider of air transportation by combining the Northwest flights with the Delta flights. ( national...

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