The Decline of the Airline Industry
...t and allowed any domestically owned airline that was deemed fit, willing and able to fly on any domestic route. This in turn caused a great deal of competition and the subsequent growth of the airline industry domestically. However, deregulation was only truly seen in the pricing and routing of flights in the U.S., not in the slotting of the airport gates and certainly not in the international competitors. Economists argue that until the airline industry can function without hidden regulations, the industry is sure to collapse within the coming years. b. One important reason for the decline in major airline industry is the introduction of micro jets. When this four to six seater plane was first available for commercial travel to the public, it was far to costly for many to even consider the prospect of chartering such a plane. However, with recent security hikes and congestion in the major airports around the world, micro jets have become more affordable and are widely used across the US to bypass the airport hassle that awaits most Americans when they travel by air. c. A major loss to the airline industry would be of their business travelers who had once almost relied solely on the airlines for travel. Airlines used to cross-subsidize low-paying leisure travelers with full-fare business tickets. Last-minute travelers paid walkup fares of more than $1000 per ticket. The rise in technology has allowed for the elimination of the necessity in air travel for business travelers. Most business meetings can be conducted through the use of computer software and web cameras, all without having to leave the comforts and boundaries of their offices. The events of 9/11 are also partially to blame for this loss because of the heightened security measures the United States required its airports to take part in. Theoretically the security measures should not have affected the travel habits of businessmen, yet the outrageous lines and waiting time tell a far more different story, and have forced business travelers of all sorts to rely on some other mode of transportation rather than forego hours better spent waiting at a crowded airport. d. There is absolutely no doubt that 9/11 had severely adverse effects on air travel in this country, but just how much damage did these events cause? The most blatant effect of 9/11, with regards to air travel, was the passenger concern over the safety of the planes and the manner in which these safety regulations were overseen. As mentioned earlier, prior to 9/11 airlines were looking to further deregulate the industry in an attempt to raise competition among carriers domestically. The events of 9/11 severed those aspirations with the onslaught safety concerns and subsequent government involvement under Homeland Security operations. The events of 9/11 caused severe customer distrust in the integrity of the safety sector of the airline industry. Many questioned pilot’s ability to handle terrorist situations, especially since these sort of situations have occurred on numerous occasions before the 9/11 attacks. The public was angered that these issues were not taken with a seriousness that could have saved thousands of lives had they been researched and enforced in time. The planes themselves came into question soon after the attacks had taken place. Critics argue that there were no locks or preventative devices to stop anyone from overtaking the cockpit of any commercial airline jet. Subsequently these concerns would soon obligate many of the large airlines to install locks on the cockpit doors, with costs in the millions to do so, yet ultimately those precautions could save the carrier millions if not billions should the unthinkable happen again. e. The manufacturing of too many new planes has also caused the airline industry some headaches it is likely to endure for some time. The problem with over manufacturing these planes is that discounting is driving down the price of a new aircraft, leading to too many seats. With the surplus of seats, naturally carriers are likely to offer passengers these discounted fares with a high return rate, yet this has only benefited the newer airlines and will ultimately drive down the average fare price even further. More seats will only put pressure on costs and yields, resulting in perpetual industry restructuring. Good news for travelers, very bad news for the airline industry. f. The pricing war of the airline carriers is likely to continu...