Economic Environment Pre- and Post-Deregulation of the United States Airline Industry - Term Paper Example

The paper "Economic Environment Pre- and Post-Deregulation of the United States Airline Industry" is a wonderful example of a term paper on macro and microeconomics. The airline industry remains a large and growing industry to date. This industry has enabled and can be identified with economic growth, trade, investment, and tourism on a global level. The airline industry is therefore key to the globalization process. Between 1990 and 1999, air travel was speculated to have grown at a rate of 7% per annum (Morrison & Clifford, 1995). The rate of travel worldwide both for the purposes of business and leisure steadily increased. In the leisure industry, the existence of huge aircraft such as the Boeing 747 has facilitated convenience at cheaper and affordable costs thereby enabling individuals to travel to exotic new destinations. Economic growth in developing countries is influencing citizens to tour the globe. Currently, these citizens are deemed as new future global tourists. The rate of business travel has also increased as more and more firms are taking a global approach both in terms of their operations and investments. The rapid increase in international trade of goods and services and direct investment on a global scale has played a significant role in increasing the rate of business travel. The International Air Transport Association (IATA), projects that air travel will increase at the rate of 6.6% per annum on average between 2000 and 2010. Slower growth is projected in regions where the airline industry is highly developed such as Europe and North America, the growth is anticipated at between 4-6 percent per annum. The most vibrant growth is centered in the Asia and Pacific region where investment and trade co by coupled by domestic prosperity is rapidly increasing. The rate of growth in the Asia region is projected to be at 9 percent per annum and is anticipated to continually increase (Boyd, 2008).

Background

In the1920s airlines were focused on carrying mail. In 1925, Ford Motor Company started the first American airliner. Its capacity was 12 passengers. Juan Trippe linked America to rest of the world with Pan Am. World War I and II brought about significant advancements in aviation technology and planes were made to carry more load and go faster. This brought about increased efficiency from both superior speed and greater payload. The Boeing 747 made its appearance in the 1970s and this further enhanced capacity of the airlines and popularity of air travel.