Us Airline Essay

1247 Words5 Pages
Analyse the attractiveness of the airline industry pre-9/11. There had been several structural changes in the global airline industry for the last decades. Some of the main factors are: globalisation, deregulation, technology improvements, and ongoing improvement in the jet engines in order to make it longer routes Pre 9/11, the demand for air travel increased due to the rise of world GDP, rise in world trade and investment (economic influence). In addition, the demand for travelling increased due to the growth of the number of retirees (social influence). This was a major opportunity within the airline industry since the global number of passengers increased from 450 million to 700 million between1990 and 2000 mainly due to the retiree that were travelling for leisure. Fuel prices and labor costs increased during the year 2000 which led to a rise in the airline cost. Air travel increased to 160 per cent from 1978 to 2000. Despite this increase, US airline RPKs (the average revenue per passenger kilometer) went down by 2.5 per cent per annum. The business model for Full Service Carriers (FSCs) main focus was to provide product quality and service to lots of cities. They had extra service features such as, for in-flight catering, entertainment, leg-room and loyalty programs. Structural changes within the industry gave emergence to another business model long before 9/11 which was the Low Cost Carriers. This model took market shares from FSCs, its main focus was to provide simple point-to-point services with no or limited connectivity and secondary airports. Porter’s five forces To analyse the attractiveness of the airline industry pre 9/11, it will be helpful make use of various models such as Porter's 5 forces framework. In 1978, the deregulation of the air passenger transport industry in the US and globally removed barriers to entry and
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