Running head: CONTEMPORARY ISSUES AFFECTING AVIATION INDUSTRY 1

Contemporary issues affecting Aviation Industry

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Contemporary issues affecting Aviation Industry

CONTEMPORARY ISSUES AFFECTING AVIATION INDUSTRY 2

Introduction

Market analysts in various countries predict that when the purchasing power of various

consumers increases, they change their lifestyles. The same applies to the festive seasons and

school holidays in which people tend to spend more as opposed to the ordinary days. The

aviation industry tends to gain from such trends, but some of the household names in the industry

suffer the worst consequences of the turbulent future that awaits them. The modern issues faced

by the aviation sector range from competition from new market entrants to the technological

advancements that are costly yet the airline owners have to acquire. Profitability concerns

equally emerge with the rising costs of oil affecting the ability to pay the workers (Moreno-

Izquierdo, et al. 2016). Other arising issues concern the environmental conservation in an

industry characterized by the release of the highest amount of carbon in the atmosphere through

jet fuel. In essence, the arising concerns remain inexhaustible and it takes the best marketing and

communications strategy to resolve the problems without generating controversy. The airlines

operate in industries infiltrated by critics, environmentalists, and competitive forces each of

which analyzes their progress and future.

The Aviation Industry

Airline companies across the world deal with multiple challenges daily. All of them

handle competition in a different way because it is pertinent to their existence. Over the past few

years, the American Airlines dealt with the rising labor and fuel costs in an environment in

which customers have multiple transport options and are willing to spend the least amount of

money to get the best value. Delta Airlines and the Southwest Airlines handles similar concerns

as the management requests better pay structures and threaten to look for jobs in the rival firms if

the companies fail to honor their requests. Other airline companies have to deal with the
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shareholder withdrawal because of the low value of their stocks. They have to convince the

shareholders that the stock value aim at attracting additional investors, but the current ones feel

that such trends cause losses. Alternatively, the airline firms with some of the most competitive

stock prices have few affluent shareholders, which mean that the majority of the society prefers

new entrants that will offer them high valued stocks at low costs.

Airline companies equally have to deal with the fluctuating costs of fuel. It affects the

stability of the business in several ways. Fuel prices reduced in mid 2014 making it possible for

the airlines increase their profit margins because they offer competitive prices that many people

can afford. Any fuel price increments in the future will apparently see the customers opting for

substitutes including road, rail, and water transport to meet their objectives. Currently, the

reduced ticket prices in the aviation industry leads to high unit revenue making the sector one of

the most lucrative after it earned over $8 billion between 2014 and 2015. Irrespective of the

increasing number of airline industries, some trusted entities including the British Airways,

Virgin Air Atlantic, and American Airways continually maintain a stable team of investors that

believe in the value of the services they offer by overlooking the competitive forces operating in

the background (Czerny, van den Berg, & Verhoef, 2016). An analysis of the issues affecting the

aviation industry in the subsequent section reveals why some companies are less prominent

while some continue to thrive.

The Outlined Issues

Security

When passengers prepare for a journey, the never know what awaits them in a society

marked by different forms of terrorist attacks. Most of the attacks of a similar magnitude often

target aircrafts. Recently, EgyptAir faced a similar encounter even though the Cyprus
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government managed to contain the situation. Later, they realized that the things they believed to

be explosives were harmless phones. Indian Airlines 814 faced a similar predicament even

though the IC 814 was under terrorist siege and it caused the death of some people on board

including Daniel Pearl and the Central Bureau of Investigations revealed. Qatar Airlines spends

several resources to ensure that security remains the company’s top priority. According to the

company CEO, Akbar Al Baker, customers fear thefts and terrorist attacks. Any airline company

linked to the two security elements is likely to face the reduction of the number of clients

irrespective of the marketing approaches it uses to attract them (Ali, 2016).

Airline companies have to address terrorism concerns and the stealing of passenger

belongings critically. The same applies to dealing with security lapses that permit the

transportation of contraband and drugs from one point to the other. Such issues come up

everyday forcing the airline firms to invest in high tech services for communications and

logistics. The clients often want the best and secure services from the aviation industry, but they

are not willing to spend more to facilitate the comfortable lifestyle (Moreno-Izquierdo, et al.

2016). Security threats go beyond terrorism and thefts inside the planes or on the waiting lounge

to the hijackings that reveal major safety hitches in the conglomerates that own the planes.

Dragonair from China reported one of the recent airplane thefts in Hong Kong, which is one of

the most secure cities in the world following the implementation of the death sentence for 51

different crimes including robbery.

The plane robbery caused traumatic pain to the passengers that equally lost electronic

gadgets, credit cards, passports, and money. At least, they were not under siege and the robber

did not ask for ransom. Reports from the Hong Kong Associated Press revealed that the

Singapore Attorney General released names of about forty-seven people linked to the SilkAir
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and Tigerair incidents of the same nature (Ali, 2016). The reputation affects the way customers

respond to the airline sector and it takes a long time and financial resources for the companies to

carry out effective marketing campaigns. The natures of crimes keep getting complicated as the

criminals and terrorists apply advanced technologies to escape the law. They go through some of

the strictest security systems before achieving their objectives, but the airlines cannot abandon

the affected routes because the customers continually rely on the availed security to reach their

destinations safely.

Accidents and Safety

Kidnappings, hijackings, and accidents equally present safety challenges to the airline

companies today. After the Russian Metrojet A321, crash on the Sinai Peninsula that killed 224

people, it was apparent that other service providers operating in Egypt. The latest crash occurred

in Memphis and no deaths occurred to the FedEx Express DC-10 flight. The American Airlines

767-300, N345AN flight number AAL383, Chicago Illinois experienced technical hitches before

takeoff and the crew aborted the journey. It means that safety concerns can be mitigated when

identified on time. Safety concerns primarily have everything to do with the proper servicing and

inspection by the relevant aviation departments. The companies address security issues by

tightening matters across the airports, but accidents remain the greatest challenge particularly in

countries affected by extreme weather. Over 450 airports globally including John F. Kennedy,

Lufthansa, and Hamad International Airport give detail to strict security measures, but handling

accidents remain difficult to mitigate.

According to (Ali, 2016), about sixteen lethal accidents occurred among 36.4 million

flights recorded in 2013. Arguably, at least 2.4 million people remained susceptible to accidents

in the same year. Plane accidents are common, but people continually use the resources because
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they provide the fastest means of transport from one place to the other. The Malaysia Airlines

went through the necessary investigation procedures from International Civil Aviation

Organization to verify its suitability to fly yet the fateful accident occurred. Across the Middle

East, training institutions such as IATA Operational Safety Audit provide the necessary safety

intervention procedures to ensure that people can use the flight services with limited worries.

Accidents often frighten people and they affect consumer response. According to the IATA

database (Global Aviation Data Management), customers give detail to issues of safety before

using airlines. They check the company records through the IATA database to assess the

companies susceptible to accidents based on their histories. Safety matters go beyond accidents,

as disease outbreaks disrupt normal business operations. The Ebola outbreak affected businesses

in 2015 because different countries had to issue travel advisories to airline operators that went to

the affected countries. Airlines that risked the hazardous journeys hiked their transport prices

because of the strict regulations to which they had to adhere.

Convenience and Competitiveness

Airline companies have to respond to the changing competitive business environment.

The need for convenience drives new entrants to technological assistance that makes bookings

easy and affordable. They make their services available through online platforms and it becomes

convenient for the clients to access them. Customer demands often shift depending on the value

of services they receive from different competitors. They often compare convenience levels from

one airline to another, but the standard procedures for lack of refunds on lateness make it

impossible for the customers to rely on one service provider. Mobile technology is an approach

that almost all airlines in the 21st century should adopt for convenience purposes (Morrison &

Winston, 2010).. The customers dread going to the airport only to find that their flights were
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canceled. Consequently, no customers want to waste time on the lounge for delayed flights.

Convenience details efficient communication and new entrants in the market understand the

significance of using modern technologies to assure the clients of the same. It deals with

reputational concerns because each service provider wants to be the best option for the range of

clients that access various services in the aviation industry. People operate in 24-hour economies

in which business transactions occur in flip seconds. The level of convenience exhibited by the

airline determines its ability to attract and retain customers (Czerny, van den Berg, & Verhoef,

2016). However, it cannot attain the same without spending much on technology and marketing

each of which present financial issues.

Financial Issues

Various things require financial sustainability for airlines to operate as expected. For

instance, introduction of new technologies for communication and security maintenance often

need finances and the airlines require profits after spending on such logistics. They face

competition from low-cost carriers. Such companies including EasyJet and Ryanair increased the

profits when Air France employees went on strike (Moreno-Izquierdo, et al. 2016). Some

customers found the companies as excellent alternatives to the mainstream expensive flight

service providers whose pretax proceeds continually reduce. The 2015 Ebola outbreak equally

affected profit generation by airline service providers that had to stop operating in various

regions that they considered lucrative in the past. The same applies to the 9/11 attacks yet the

low-cost airline service providers continue to increase in response to the mounting demands for

quality yet affordable travel packages (Moreno-Izquierdo, et al. 2016). Airline firms that do well

in eth contemporary business environment make up to $18 billion if they do not face excessive

competition. However, the increasing labor costs, maintenance services, insurance deductions,
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inspection fees, and marketing consume the highest amounts of the resources leaving the airlines

with a limited working capital to sustain growth. Fluctuating fuel prices coupled with the

unstable exchange rates also affect the aviation industry from a financial point of view. Ideally,

various political fronts discuss the need to increase the minimum wage yet the airlines deal with

customers whose purchasing power reduces and their bargaining power increases. They face the

challenge of dealing with labor unrest like Air France and KLM even though they want to sustain

a good image to attract the investors (Moreno-Izquierdo, et al. 2016).

Sustainability

Airline operating across the Eurozone understand how much it takes to reduce the carbon

index during operations. The region is overly strict about global warming and climate change

that it would do anything to ensure that the amount of CO2 and greenhouse gasses released per

metric ton continually reduces over the years. An environmental audit of the region reveals that

any company that shares excellent relationships with eth environmentalists and

conversationalists often enjoys sustainability. The aviation industry remains on the spotlight for

eth release of greenhouse gasses through the contrails formed by high-elevated planes. Few of

them present projects to detail their efforts geared at reducing the consequences of climate

change and global warming. The aviation industry commits to capping of a carbon emissions

policy for the constitution to recognize its efforts aimed at creating a carbon-free environment.

The ambitious project scheduled for fruition in 2020 will be one of a kind in the targeted industry

(Morrison & Winston, 2010).

Complaints launched by environmentalists include the fact that major industry players in

China, Britain, the U.S. the UAE, and South Africa are government owned airlines that often

violate the Kyoto protocol. In fact, in the early 2000s, various superpowers went on a mission to
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support a project that would counter the activities of the contrails by spraying chemtrails in the

sky. The activity achieved negative results even though no country owned up to the exercise. in

essence, influential entities run the aviation industry and few of them give detail to sustainability

concerns except when it comes to scrap metal recycling (Morrison & Winston, 2010).. However,

none of them uses alternative sources of energy on the plane fleets. Environmental conservation

debates make up 90% of the discussions today. Almost all organization prefers venturing into

green business ventures because either they participate on greenwashing exercises or genuine

corporate social responsibility endeavors. Technological assistance sustains alternative sources

of transport such as vehicles with biofuels and electric energy, but the aviation industry faces

various challenges that impede the successful implementation of the same fuel saving approaches

(Morrison & Winston, 2010)..

Fuel issues and Overcapacity

Fuel prices continue to change over the years and it remains one of the greatest concerns

faced by the aviation sector. The airlines face the effects of skyrocketing fuel prices since 2009

even though 2014 provided optimism for major players in the industry. Virgin Atlantic Airways

and the British Airways confess that fluctuating fuel prices explain why it is impossible to reduce

the cost of transportation. Jet fuel is costly and any attempts to replace it with other affordable

products predispose the planes to the risk of accidents. Inspection agencies watch closely for any

such possibilities that would risk the lives of the innocent people on board and they report the

matters to the relevant authorities. Companies fear the revocation of work permits in an

environment infiltrated by the overcapacity of airline service providers. Some companies have to

offer the most affordable travel deals while anticipating that the costs of fuel will remain the

same or reduce. They only rely on economic and political stability in the oil producing countries
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because the two factors determine the prices set by OPEC. Thus, the challenge of overcapacity

arises because customers can easily find alternatives when the travel costs in the mainstream

aviation companies increase. Sometimes the main airlines have to collaborate with the minor

counterparts to facilitate transportation (Czerny, van den Berg, & Verhoef, 2016). Instead of

earning all the money, cost sharing takes place.

Conclusion

The aviation industry faces inexhaustible challenges from financial to environmental.

They deal with regulatory authorities that strive to ensure that the customers are safe onboard.

Some of the issues dealt with in the same process include safety, security, and sustainability.

With the increasing numbers of low-cost aviation firms today, modern mainstream service

providers have to spend more to entice customers. The airline service providers part with

finances for advertising and marketing to achieve the requisite publicity. In summary, the

availability of alternatives and new entrants in the market give companies in the aviation industry

a run for their money.

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References

Ali, A. (2016). Exploring lean strategy for service quality improvements in UK based

airline (Doctoral dissertation, Brunel University London).

Czerny, A. I., van den Berg, V. A., & Verhoef, E. T. (2016). Carrier collaboration with

endogenous fleets and load factors when networks are complementary. Transportation

Research Part B: Methodological, 94, 285-297.

Moreno-Izquierdo, L., Ramón-Rodríguez, A. B., & Perles-Ribes, J. F. (2016). Pricing strategies

of the European low-cost carriers explained using Porter's Five Forces Model. Tourism

Economics, 22(2), 293-310.

Morrison, S., & Winston, C. (2010). The evolution of the airline industry. Brookings Institution

Press.