Industry Research Completion for Eco 205

The airline industry ushered in a new way of travel. Trains and large ocean liners were replaced by the airplane. The Golden Age of Travel was one of luxurious accommodations that could get you to your destination in less than 24 hours. For the first time in history, someone could travel from Boston to Hawaii in less than 48 hours. Everyone was amazed at the speed and technology flying offered. Some aircraft were outfitted with sleeping beds trains and ships. It was a real treat for people to fly. Unfortunately the golden age of travel only lasted until the mid 1970’s. Once the oil embargo occurred and the resulting economic downturn occurred, the joy of flying began to come to an end. After the deregulation of the airline industry in the 1980’s occurred, all bets were off and here we find ourselves today, most airlines barley able to keep flying.

In the recent years, the cost to operate an airline combined with strong competition has created a volatile business atmosphere in the airline industry. The result has been either airlines going out of business or merging and consolidating the routes and functions. Both of these scenarios cause the supply of labor to shift to the left because all of a sudden the market is flooded with experienced labor. The resulting effect is the demand shifts to the right because now that almost half of the jobs have disappeared by the merger, and there is almost no demand. There are too many people and not enough jobs.

This could be demonstrated by the merger of American Airlines and TWA in 2001. The combination of these two airlines created one of the largest airlines in the world. However, it wasn’t too long after the successful merging of the two operations, that the new parent company, American Airlines, didn’t need all of the terminal space around the country that they got from TWA. One by one, gates were closed, entire facilities were closed and sold off, routes were eliminated,...