The airline industry has seen drastic changes since September 11, 2001. The government ordered a complete shutdown for three days of not only all commercial aircraft but such carriers as domestic flights and emergency aircraft. For days after September 11th, all aircraft stayed on the ground. Even military aircraft had to receive special clearance to fly. In a ripple effect, the entire economy of the United States and the world was put on hold. The New York Stock Exchange shut its doors because of the attacks on the towers of the World Trade Center.
The airline industry is classified into four categories by the Department of Transportation. The four categories are International, National, Regional and Cargo. The following are issues that affect the airline industry to some extent: airport capacity, routes, technology, aircraft purchase or lease costs, weather, fuel costs and labor. An estimate of up to 40% of an airline’s expenses is related to paying their employees.
The airline industry not only transports passengers across the country and world but it also moves cargo from location to location. The largest segment for the airlines is general commercial passengers and business travelers. In 2004, there were 15 major airlines with 12 of those being mainly passenger carriers, the remaining three being cargo carriers. In addition to the large airlines (Delta, United, American, Southwest, Northwest), there are numerous low-cost regional carriers that have tapped into the larger carriers’ customer base. These smaller companies generally fly from smaller airports and serve a smaller amount of destination cities. Calling them a no-frills air carrier would not be far from the truth. Their goal is to move customers from origin to destination at the lowest cost possible. These regional carriers do provide a benefit to the traveling public. Because of their cheaper fares, the larger airlines are forced to hold down the cost of their flights in order to still attract customers. Of course when a smaller regional carrier does not service a destination that one of the larger carriers does, then any potential cost savings is lost. Another point worth noting is that several of these regional carriers are subsidiaries of a larger airline.
“After September 11th, passenger traffic dropped off severely, causing the airlines to cut flights, layoff workers and park surplus aircraft” (College Grad, n.d.). Conditions are favorable for a turn around in passenger traffic. With the ever expanding world economy, business travel has become more necessary. One area that is not expected to grow is the domestic cargo segment in comparison to international cargo flights. Airlines need to examine the destinations where they fly. If one of the destinations becomes unpopular, then the airline will need to make adjustments or profits will suffer. A good example would be back in the late 50’s where one of airlines main destinations would have been Cuba.