Reaction of Domestic Airline Industry to Recession - Coursework Example

 In the same period, there was a similar movement in Consumer Price Index for domestic airline fares (Transtats.bts.gov, 2015).

Domestic United States air travel demand decreased from mid-2008 to mid-2009 due to widespread repercussions of the global economic recession. During the period, few U.S citizens purchased plane tickets. According to statistics that were produced by International Air Transport Association, the demand for global travel decreased by a percentage of 3.5 in 2009. This according to the department was the largest decrease since World War II (Transtats.bts.gov, 2015).

Due to a decrease in demand, an imbalance developed between demand for air travel and capacity. Capacity could not be reduced as fast as demand declined. Capacity for domestic travel increased at the start of the recession since new planes that were ordered months before the recession was coming into service despite the deepening in the recession. The reduction in demand lowered the prices of domestic air travel.

Price recovery in domestic airline travel began in late 2009. In addition to the imbalances in demand and capacity, there was an increase in jet fuel prices during economic recovery resulting in increased air passenger fares.