Airline Industry

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Date Submitted: 09/15/2012 07:17 AM

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U.S. Airline Industry

The U. S. airline industry must be willing to make needed changes in order to succeed. Industry deregulation affected the airline industry through bankruptcies and mergers. This evolution spawned the need for change in the industry and evoked a competitive nature. A comprehensive evaluation indicates the need for change within the airline industry, predominantly in the areas of operating costs and customer satisfaction.

Synopsis of the Case

The airline industry has faced many turbulent times since its inception. Regulations have been enforced, deregulation has occurred, new strategies have emerged, acquisitions have transpired, and the remaining companies have needed to differentiate themselves from the others. The entering of the low cost carriers has infringed upon the profits of the larger companies.

Relevant, Factual Information about the Problem or Decision the Organization Faced

The major problem faced by airline industries is the operating costs and ensuring customer satisfaction. The cost of labor, fuel, equipment, and airline facilities are the ultimate problematic areas in operating costs (Grant, 2010). This correlation directly supports the decline in customer satisfaction, as in the price of tickets and the lack of amenities.

Explanation of Relevant Concepts, Theories, and Applications Derived from Course Materials

The threat of substitutes is relatively low. There is no comparative commercial substitution to air travel within the U.S. The only comparisons are bus and train, but neither of them offers the speed of travel that the airline does. This lack of feasible substitutes ensures that the airline industry will remain successful.

The impact of deregulation instituted a threat of entry with a surge of new carriers. During this time, 20 new carriers entered the scene and hundreds of carriers went bankrupt (Grant, 2010). Low cost carriers entered the industry and allowed for the same services at cheaper...