Analysis of the Airline Industry 1
Abstract
The airline industry is known to be the fastest mode of transportation throughout the United States. Consumers are constantly trying to find cheaper fares, while airliners are constantly analyzing consumer’s trends to decide how to charge fares. Airliners ultimate goal is to increase revenue. Sometimes the increase can lead to bad service and unfriendly competitive practices. The present day airline industry is dominated by larger air carriers. This paper will discuss why the airline industry has developed into an oligopoly, how price wars historically affected main carriers, why many startup carriers failed, and the advantages of price setting, variation in seat pricing and the advantages of collision of larger airlines.
History
The first successful flight occurred in 1903 with the Wright brothers in Kitty Hawk, North Carolina. This marked the beginning of the aviation industry. At first airplane travel was not popular. After the U.S. involvement in World War 1, the airline industry’s growth stagnated until 1927. When Charles Lindberg successfully completed a solo flight across the Atlantic Ocean the industry began to evolve.
A variety of air transport holding companies began to form, including American Airways, now know as American Airlines. In 1928, the Boeing Company and the United Aircraft and Transportation Corporation were developed. The United Aircraft and Transportation Corporation merged to form the United Airlines. A major growth of the industry occurred with the development of the mail transport system by the United States Postal System. The Kelly Airmail Act of 1925, allowed private airlines to have the opportunity to function as mail carriers through competitive bids. This expanded the opportunities of carrying other forms of cargo, including passengers.
In 1926, because of the massive amount of air traffic, the Air Commerce Act was passed and it allowed Federal regulations of air traffic rules to provide safety. There was not
The airline industry is known to be the fastest mode of transportation throughout the United States. Consumers are constantly trying to find cheaper fares, while airliners are constantly analyzing consumer’s trends to decide how to charge fares. Airliners ultimate goal is to increase revenue. Sometimes the increase can lead to bad service and unfriendly competitive practices. The present day airline industry is dominated by larger air carriers. This paper will discuss why the airline industry has developed into an oligopoly, how price wars historically affected main carriers, why many startup carriers failed, and the advantages of price setting, variation in seat pricing and the advantages of collision of larger airlines.
History
The first successful flight occurred in 1903 with the Wright brothers in Kitty Hawk, North Carolina. This marked the beginning of the aviation industry. At first airplane travel was not popular. After the U.S. involvement in World War 1, the airline industry’s growth stagnated until 1927. When Charles Lindberg successfully completed a solo flight across the Atlantic Ocean the industry began to evolve.
A variety of air transport holding companies began to form, including American Airways, now know as American Airlines. In 1928, the Boeing Company and the United Aircraft and Transportation Corporation were developed. The United Aircraft and Transportation Corporation merged to form the United Airlines. A major growth of the industry occurred with the development of the mail transport system by the United States Postal System. The Kelly Airmail Act of 1925, allowed private airlines to have the opportunity to function as mail carriers through competitive bids. This expanded the opportunities of carrying other forms of cargo, including passengers.
In 1926, because of the massive amount of air traffic, the Air Commerce Act was passed and it allowed Federal regulations of air traffic rules to provide safety. There was not
References: Heil, Scott and Terrance W. Peck (1998) The Encyclopedia of American Industry, 2nd ed. 15, 2010 Verville, K http://assoiciatedcontent.com on March 15, 2010 Heil, O., Helsen, K erupt. Intern. J. of Research in Marketing 18 (2001) 83-98 Jones, Charisse (2009) http//usatoday.com on March 15, 2010-04-01 Bureau of Transportation Statistics (2010) Rising Breakeven Load factors Threaten Airline Finances. Retrieved from: http://www.bts.gov on March 15, 2010 McCabe, Richard succeed today is measured according to several key success factors. Retrieved from: http://gbr.pepperdine.edu on March 15, 2010