Commercial Passenger Airline Service Industry - Research Paper Example

Module Commercial Passenger Airline Service Industry The airline industry is a huge industry that offers a wide range of services. This industry provides air travel services to the people that need to travel from one destination to another by air. Similarly, the airline industry provides freight services and cargo ferrying from one destination to another at a fee. Large airline companies have large aircrafts that transport large cargo and many passengers. On the other hand, some companies provide the transport services through small aircrafts that carry just a few people. Most of the small aircrafts offer exclusively business classes thereby carrying only a few people who are willing to pay a higher charge for the high quality services (Cento 11). Apparently, the demand and supply of the airline services is dependent on a number of factors. Some of these factors are positive attributes which boost the industry to become more competitive as opposed to other modes of travel. The negative factors affect the profitability index of the airlines as they record low revenue from reduced. FACTORS AFFECTING DEMAND OF AIRLINE SERVICES The airline industry goes through turbulent times while in other seasons, the business sprouts. This is due to a number of factors that affects the demand for the services of the airline industry. Some of these factors are controlled by the industry while others are not easily controlled by the industry (Shaw 34). For example, some natural factors that affect the demand for the services of the airline industry are not easily controlled by the airline industry. Therefore, it is in the best interests of the airline industry to make sure these factors are not adversely affecting the demand for the services. The first factor that affects the airline industry is political stability. The politics in different places of the world are dependent on the political environment. Politics is an aspect that affects virtually every service and production industry (Fojt 22). This is due to the political orderliness that comes when the political environment is stable. When the political environment is stable, there is perfect supply and demand for services and products in the market. This is the same approach that is used in the airline industry. Many people would like to travel when the political environment is calm. For example, when there is political tension in a particular country, many people fear for their lives. As such they are not likely to travel to such places. This will affect the airline industry as it will struggle with a low demand for its services (Ben-Yosef 23). Apparently, many people are not likely to travel when there is political instability in a country. In some instances, many people would prefer to postpone their vacations when there is political instability in an area. This will have direct and dire effects on the airline industry since there will be a low demand for the services and products of the airline companies (Cento 7). However, when there is political stability in most places where the industry operates, there are many people that feel the urge to travel. This will ultimately increase the demand for the services of the airline industry. Security is one factor that affects the demand for many services and products in the world. Security is an ultimate factor that affects their demand and supply for services. For example, when there is insecurity in an area, the demand and supply of services and products will be halted. In some instances, there is a curfew due to security reasons. As such, business operations are limited to the stated times. This is the same scenario that happens in the case of demand for airline services. Many people prefer secure places when they are traveling. As such, they will only consider traveling when there is steadfast security. Though airline industry tries to limit cases of insecurity, some instances are not controllable. For example, when there were terror attacks in September 11th, many people felt that the security was jeopardized (Liguori 6). During this time, the airline industry struggled through hard times in operations. The demand for airline services was extremely low since the market felt that there was insecurity. Apparently, there are many airline companies that closed at this particular time since there was a low demand for their services. As it is explicitly seen, the airline industry is adversely affected with the security of the world, especially with terror groups threatening to attack. In most cases, the airline industry has little to do in controlling the security since they are not under any obligation to control the security of a country. Airline industry is one of the industries that have been recording significant growth over the years. Many airline companies have been growing to render their services to other places which have not been previously serviced with such. This increases the dominance of the airline industry as it offers services to many parts of the world. This is a factor that would affect the demand for airline services. For example, many airline industries have established en route and connection services. This allows many people travelling to different destinations to use the same plane (Fojt 32). The people will then alight at their destinations and connect to other destinations. This has helped sprout the airline industry as many people are likely to be served by the same aircraft. However, when such services are not given in the airline industry, many people would prefer to take other means of transport. This is due to the efficiency and effectiveness that is derived from choosing other traveling modes. This will have direct effects on the demand for airline services. Enhancing connection services allows many people to be served at the least time, which instigates the demand for transport services. Lastly, the Introduction of airlines in developing towns and cities is a factor that affects the demand for the airline services. With introduction of airline services to developing cities across the globe, many people will feel the urge to travel to such places especially when they have to conduct businesses. In addition to this, the quality of services and the range of services will have direct effects on the demand. When the quality of services is high, many people are likely to demand such services. FACTORS AFFECTING SUPPLY OF AIRLINE SERVICES The supply of airline services is dependent on various issues, which could also affect other industries. The first factor that affects the supply of airline services is oil prices and labor costs. When oil prices are high, there is a likelihood that the costs of offering these services will escalate. In such a case, the airline industry will be reluctant to offer some services since they are expensive. Airline companies prefer to offer a range of services when the costs are manageable. For example, when the cost of labor is low, the airline will employ more people to offer the services. As such, the supply will significantly increase. On the other hand, when the labor costs are escalating, the airline companies prefer to cut on costs by employing a limited number of workers. This has direct effects on the range of services that are offered. As such, the supply of airline services will reduce. Secondly, the number of people in demand will have direct effects on the supply of the airline services. When there are many people that need the services, the airline will have to make arrangements to increase the supply. This will provide ample services to the people that need them (Cento 18). However, when the demand for services in a certain place is low, the airline industry will reduce the supply of airline services. The airline industry is affected by peak seasons when many people would like to travel from one destination to another. At these times, many people would like to take their vacations in different places. This has direct effects on the supply of airline services. There will be an increase in the supply as many people are in demand (Walsh 26). Similarly, when there is an introduction of a new fleet of aircraft, there is an immediate increase in the supply of the airline services. For example, when there was introduction of Boeing 767, the supply of airline services increased. In addition to this, when the competitor increase, there is an increase in the supply of airline services. Lastly, the supply of airline services is affected by some Infections and diseases. For example, when there was an outbreak of swine flu in the world, some airline industries halted their service delivery to some places. For example, there was less number of flights to Mexico and from Mexico. This was after an alert of infections. This reduced the supply of airline services as the people were taking control measures. PROSPECTS OF THE AIRLINE INDUSTRY The airline industry has been recording improvements with each passing day. The industry has ensured there is development and improvement of its services to attract a larger demand. For example, the airline industry has been working to stabilize the pricing. This is an approach that is directed towards maintaining the demand for its services (Fojt 26). Secondly, the airline industry has been working to procure larger aircrafts that carry a large number of people. This is economically significant as it reduces maintenance and fuel costs. Thirdly, the airline industry has been making plans to start establishing its services in other places that have not been established. In addition to this, the airline industry has started banking on short distance flights as they record larger turnout. Therefore, the airline industry has been going through all odds to remain on top in offering high quality services. With such measures, it has been able to record a significant improvement in terms of service delivery. Works Cited Ben-Yosef, Eldad. The Evolution of the US Airline Industry: Theory, Strategy and Policy. New York: Springer, 2005. Print. Cento, Alessandro. The Airline Industry: Challenges in the 21st Century. New York: Springer, 2009. Print. Fojt, Martin. The Airline Industry. New York: Emerald Group Publishing, 2006. Print. Liguori, J. Michael. Commercial Airlines: Passenger Fee Issues. New York: Nova Science Publishers, Incorporated, 2011. Print. Shaw, Stephen. Airline Marketing and Management. New York: Ashgate Publishing, Ltd., 2004. Walsh, R. Connor. Airline Industry: Strategies, Operations and Safety. New York: Nova Science Publishers, Incorporated, 2011. Print. Read More