Free

The airline industry in the US - Essay Example

Comments (0) Cite this document
Summary
The writer of the essay "The airline industry in the US" suggests that the companies in the airline industry need to provide the better quality of service - update new technology. Also, existing companies in the airline industry should lower their cost to gain more profits…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94% of users find it useful
The airline industry in the US
Read TextPreview

Extract of sample "The airline industry in the US"

The market share concentration in the airline industry is medium. In the top four airline companies held a market share of more than 68.8%. In comparison with 2010 the market share of the top for airlines increased by 5.5%. One of the primary reasons for the increase is consolidation. A good example for consolidation is the merger between US airways and American Airlines. The consolidation maximizes profits of the merged companies. Synergies helped the company achieve economies of scale under the name of an American brand. It also can be more profitable than operate it separately.
Coach customers, first and business class customers, business, and freight are the four types of customers that make up the major markets. The private customers dominate the major market. The large demand from individuals and households counts for the revenue of 72% in the major markets. The airline industry uses discrimination among the private customers, thus they can charge different price to different customers such as first-class seats and coach seats. Businesses make up about 25% of the revenues of the company. Some consulting companies always appoint their staff to have conference or meet with their clients. The last type is freight. Households are more willing to shop online and so the demand for cargo transportation is increasing which makes up the 3% of industry revenue.
The airline industry is highly competitive due to the high fixed costs and high barriers of entry. When the existing companies increase their quality of service or new airlines enter the industry competition among airline industry also increases. Furthermore, high competition in the airline industry is also due to fact they cannot lower more operating costs. The switching costs are very low for customers due to the rewards program. The best examples are frequent flier program and customers brand loyalty. When customers cumulate their miles in the same airlines they can redeem their points to get some rewards.
The industry has low-cost competitors and legacy carriers. Low-cost competitors like jet-blue, focus on the low cost routes and point-to-point service. They have diversity of routes in short distance which can increase their demand and increase their revenue. For legacy carriers, like Delta, they offer some international routes which cover large geographic areas and they also offer better experience for customers. There are some ways to become more competitive. The companies in the airline industry need to provide better quality of service (update new technology). E-tickets are a good example since customers can check in online; it may be more convenience for them to take airplane. Also existing companies in the airline industry should lower their cost to gain more profits. The cost includes rent fee for airport and the labor fee. Location is also a good way for them to become more competitive by offering flights for popular routes.
Companies in airline industry should also attract customers from substitutes because customers are very price sensitive, thus the option for them to differentiate products is very limited. For example, if in short distance, customers would like to take cars and trains for traveling. Also for business customers that always go to other cities to meet with their clients or have conference. With the technology developed business customers can have conference through Skype or Facetime. Companies in airline industry will face many challenges. Airlines operate in the economic market known as an oligopoly. An attribute of an oligopoly is that there are few participants in the market. Competition in an oligopoly marketplace is fierce. Often price wars occurred which depletes the profits of all market participants. Technology is a key factor that affects the operations of an airline. Airlines must invest heavily in airplanes to increase the reach and scope of the business. Capital is a barrier of entry that dissuades many investors from entering in this industry. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The airline industry in the US Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
The airline industry in the US Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/macro-microeconomics/1702334-the-airline-industry-in-the-us
(The Airline Industry in the US Essay Example | Topics and Well Written Essays - 500 Words)
The Airline Industry in the US Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/macro-microeconomics/1702334-the-airline-industry-in-the-us.
“The Airline Industry in the US Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/macro-microeconomics/1702334-the-airline-industry-in-the-us.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The airline industry in the US

US Airline Industry

...?US Airline Industry Background of the case The US Airline Industry is one of the most renowned industries in the world. As it continuously gain familiarity, it is highly considered one of the best areas to understand business especially using the international business trade theories. Recently, the industry suffered poor level of profitability. There are various factors that could substantially explain this and the bottom line of doing it would mean understanding the external and internal business environment of the US Airline Industry....
9 Pages(2250 words)Essay

Merger For Success In The US Airline Industry

...?MERGER FOR SUCCESS IN THE US AIRLINE INDUSTRY BY ID # SUPERVISOR Contents Contents 2 Introduction 3 Competition Policies Impacting the US Airline Industry 5 Deregulation and the Impact on Competition in the Airline Industry 7 Mergers and its Impact on Competition in the Airline Industry 8 Conclusion 11 References 13 MERGER FOR SUCCESS IN THE US AIRLINE INDUSTRY Introduction The airline industry has been experiencing economic difficulties ever since the terror attacks in the...
11 Pages(2750 words)Research Paper

Airline Industry

...for British Airways in 2010 was pegged at 414.6 Pounds which represents an increase from its previous year figures that was pegged at 387.1 Pounds (British Airways, 2010, p.16). Employee productivity for Emirates Airlines was found to be 1459 AED which also represents an increase in figures from the previous year which was calculated as 1492 AED (Emirates Airlines, 2010, p.123). The increasing trend of Employee productivity largely reflects the growing operational excellence in the two organizations. Use of new aircrafts like Airbus A 380 coupled with improved demand forecast have led to a growth in the employee productivity of both these organizations. Task 2 Introduction The...
12 Pages(3000 words)Dissertation

Explain the development of the US Airline Industry and what role did the government play from 1910-1950

...? US airline industry is one of the largest airline industries in the world. It carries more than six hundred million passengers and almost eighteen million pounds of freight per year, generating billions as its revenue (Omelia, 2003). It has however been a process of several decades that has made this industry flourishing and the government has played an important role in its development. Even though the first airplane was developed in the US in the year 1903, it was not until the year 1914 when the first commercial flight took place. It was the world’s first commercial flight which travelled from St. Petersburg to Tampa...
2 Pages(500 words)Essay

The US Airline Industry

...?Running Head: US Airline Industry US Airline Industry [Institute’s US Airline Industry Executive Summary The airline industry is at the heart of US economy because of the direct and indirect GDP and employment it generates. The paper explores application of international business theories on the US airline industry. Although the core service is of air travel, the augmented service that includes secondary benefits such as food, entertainment, comfort and other have been in the spotlight...
7 Pages(1750 words)Essay

Economic Profile of the US Airline Industry

...? Economic profile of the US airline industry Introduction The airline industry is a cyclical one. The industry witnesses bankruptcy as well as M&A activities every decade. The airline industry of United States is currently standing a space from where the future does not seem to be bright. The estimates of the International Air Transport Association and that of Federal Aviation Administration expect a rise in cargo traffic and passengers along with decline in profits for the airline companies. Things are to be sorted out before the estimation of profits for the year 2012. As the third...
5 Pages(1250 words)Research Paper

Use of Information Technology in US: Airline Industry

...The use of INFORMATION TECHNOLOGY in the US Airline Industry INTRODUCTION Flying has become one of the most popular forms of public transportation. Now air transportation is as much a part of life as telephone or computer. Speed, efficiency, comfort and safety - these are the 4 symbols of both modern civilization and modern air transportation. If one wants to get anywhere in a hurry, as most business people do, because time means money, is to fly. Air transportation has enabled employees of business and government organizations to reach any point in the world within hours. Over the recent years, as more and more passengers are flooding airports it has...
7 Pages(1750 words)Case Study

Has UK Anti-Discrimination Legislation Succeeded in Providing Equality in Workplace

12 Pages(3000 words)Essay

US Airline Industry

...Running Head: US AIRLINE INDUSTY US Airline Industry of the of the US Airline Industry Introduction Southwest Airlines belongs to Dallas, Texas, USA. It is a low-fare airline, serves individuals of more than 50 different cities of 28 states. These US airlines presently render more than 2400 flights in a day, and still expanding itself more towards east. Southwest Airlines of US possesses a significant strategy, which has brought profits from past 26 years. Short-haul journeys make almost 80% of total load of flights on the company. Nevertheless, it is rendering more number of long-haul flights and expanding its range in order to stand with bigger domestic carriers. Southwest first expanded to the East Coast in 1993, with service... to...
8 Pages(2000 words)Essay

Airline Industry

...travel Influences on small vs. big airlines such as Airbus and Boeing Economic influences on the need for new classes of services (D’Aveni, 1995). Technological Increased internet and computerized customer and travel service provision Better management and customer service provision, through technology-enhanced applications (Jarach, 2004). Environmental Changes in climate vis-à-vis link with global warming Continued use of oil-based jet-fuel vis-à-vis bio-fuels that are less expensive and environmentally safer (Captain & Sickles, 1997). Opportunities Advanced European aviation industry Market regulation to protect and nurture national carriers Advantageous low cost...
4 Pages(1000 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic The airline industry in the US for FREE!

Contact Us