Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy
The following information discusses trends in the U.S. airline industry as well how these trends had an impact on the company’s specific strategy. Crude oil prices rose to a record high of $140 per barrel in 2008 when the U.S. economy began to As a result, cutbacks were applied within businesses on travel as well as private vacation
travel. As crude oil prices continued to rise, jet fuel prices additionally rose and it determined by the Airport Transport Association that each 1-cent increase in the growing price of jet fuel per gallon cost the industry around $190 to $200 million per year. to develop alternative ways to offset this growing cost started to take place and played large part in organizational strategy.
As a result, consumers were required to pay up 25 for fuel surcharge as well as $15 for their first checked-on bag. They additionally began to charge consumers for use of headphones, blankets, and pillows. The consumers, however, were not the only ones affected by these new strategies. Operating costs cut within companies through the reduction of employee wages. The sharp increase costs greatly impacted smaller airline companies as several of them were forced into bankruptcy. Larger companies coped with the issue by merging with other large companies.
Another trend which led to struggles in the industry was the inability to meet demand for pilots each year. According to the International Air Transport Association,
the global airline industry needs 3,000 more pilots each year than training schools able to provide (3). The sudden shortage of pilots comes from the retirement of all baby-boom generation pilots. Airline industry companies suffered greatly from this decrease because larger companies would buy out the smaller airline pilots through
offering better pay (Michel & Rovenpor C71).
Through the contribution of large increase of fuel...