U.S. Airline Industry

US Airlines Case Study

U.S. Airlines Case Study

Since deregulation a combination of the September 11, 2001 terrorist attacks, high fuel costs, and the 2008 financial crisis has contributed to the dismal state of the airline industry (Grant, 2013, p. 472). The U.S. airlines have weathered stormy skies (Suciu, 2011). Through cost cutting efforts, process improvements, and less competition through mergers the airlines are profitable, however, even with all the optimism, the outlook still remains bleak for the industry (Grant, 2013, pp. 472-474). To sustain profitability the airlines will need to abandon some routes leaving smaller airports without service (Federal, 2011) and become better not cheaper, meaning less capacity for those who fly (Siciu, 2011).

Synopsis of the Case

The airlines have overcome the times when they were consistently losing money; even as fuel prices increased the carriers are making profits (CAPA, 2012). Though the industry appears to be profitable, compared to other industries, their results are dismal (Reed, 2013). They face new headwinds with new pilot regulations that are causing regional carriers to face a pilot shortage and the new pilot fatigue regulation that is anticipated to increase costs (CAPA, 2012).

The industry is susceptible to major disruptions as weather, disasters, and illness that can ground planes, increase expenses, and cut into profits (Suciu, 2011). There has been little innovation in the industry; in fact the opposite is true (Borenstein, 2012). Many have seen management changes for the good in the industry, which has helped the airlines to realize profits in a down economy, however with growth of only 2-3 percent predicted through 2022, more needs to be done (CAPA, 2012). Changing the airline infrastructure through the elimination of small to mid-sized airports should be considered (CAPA, 2012).

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