TITLE OF ASSIGNMENT
CRAFTING AND EXECUTING STRATEGY
DR. RHONDA POLAK
STRATEGIC MANAGEMENT –BUS 599
DATE: - OCTOBER 16, 2011
Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy.
Trends in the US airline industry have an impact the performance and strategies of the
airlines. As a result, the Jet Blue has struggled to survive. The trends of U.S. airlines industries are discussed as follows:
(1) Increased crude oil pricing: fluctuations crude oil price lead to passenger fees for revenue generation, This dramatic price increase caused airlines to struggle to offset the cost of fuel. Presently, gas prices have dropped. However, the airlines continue to pass along the fees to its passengers to increase revenue. Clearly, the fees that began originally in response to fuel prices continue to be part of the revenue generating strategies of airlines.
(2) Shortage of Pilots: As baby boomers retire by the thousands, the airline industry is experiencing a shortage of pilots. Before becoming captains, pilots must earn sufficient fly hours. However, flying schools do not have enough instructors to train enough new pilots. In response, the airline industries face increase labor costs as they raise pilot salaries in order to attract pilots.
(3) Post 9/11 Aviation Security: after the 9/11 terrorist attacks, Congress passed the Aviation and Transportation Security Act (PDF), which created the Transportation Security Administration (TSA) and mandated that federal employees be in charge of airport security screening
Jet Blue was a discount airline carrier. It offered passenger law fares; operated point to point system. Jet Blue total operating expenses amounted to 12.77 cents per revenue passenger mile compare to 20.95 cents. The mandates caused the airlines to adopt several layers of security. TSA implemented more thorough...