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International Airline Industry Essay

1590 words - 6 pages

International Airline industry, airline business has grown as companies increasingly are turning to international in terms of their investments, their supply and production chains and their customers. As world is being term as global village, the rapid growth of world trade in goods and services and international direct investment have also added in the expansion of business travel. One thing that really impressed me about Airline Industry was their ability to maintain high profits and maintain a high customer base even after the September 11 attacks and 2002 recession. The international prices have increased due to improved security system whereas local or national prices are very affordable to customers.Airlines' success is primarily due to their sharp focus on their goals. This is evident by their no-frills, low-cost model; their goal is to provide the safest and cheapest form of air travel between two destinations. Driven by the idea that customers can be satisfied without having expensive options available for them, International Air Transport Association, IATA, Worldwide, forecasts an increase in international air travel by an average 6.6% a year to the end of the decade and over 5% a year from 2000 to 2010. These rates are similar to those of the past ten years. According to the past four years, results of Airlines' financial progress, they have maintained steady net sales. In 1999, they had an average net sale of $6,739 million, which had risen to $7,565 million. Their slight drop in 2002 to $7,225 million was due to the September 11th incident. However, this is nothing compared to other major industries that had lost so much more. Since then, many have even filed for bankruptcy and have been forced to close down. In fact, Airlines was the only major US carrier to remain profitable since then; Airlines was affected by the poor economic conditions.There is no alternative of Airline, which can offer the speed of air travel; most of Airlines' customers are attracted to the low price. In Europe and North America, where the air travel market is already highly developed, slower growth of 4.2%-6.5% is expected. The most dynamic growth is centered on the Asia/Pacific region, where fast-growing trade and investment are associated with soaring domestic prosperity. Air travel for the region has been soaring by up to 9.3% a year and is forecast to continue to grow rapidly, although the Asian financial crisis in 1997 and 1998 will put the brakes on growth for a year or two. In terms of total passenger trips, however, the main air travel markets of the future will continue to be in and between Europe, North America and Asia. (Michael D. Hutt & Thomas W.Speh, pp. 16)Economic growth and business activities is major contributor towards the Airlines' profitability. During the first half of the 1990s, the industry suffered not only from world recession but the Gulf War further depressed travel. In 1991 the number of international passengers dropped for...

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