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Airline Industry
On September 11th 2001 tragedy struck the world and in particular the United States of America when commercial airliners where hijacked
by terriosts who proceeded to crash the fully loaded passenger planes into the world trade centre and the pentagon.   This tragedy had a huge
impact on everybody including people and businesses. Although the tragedy of 9/11 has a lot to do with the fall of the airline industry it is not
totally to blame according to (Wolf 1995) by the beginning of 2001, the airline industry was already feeling the effects of one of its historical
enemies, economic recession. Economic recession exposes overcapacity in the market leading to declines in prices as carriers scramble to fill
seats and retain market share. Financially weak (or bankrupt) carriers create further downward price pressure in their attempts to generate
revenue. 

In this essay I will be discussing arguments for and against the attractiveness of the airline industry pre and post the tragic events of 9/11
followed by discussion on the strategic implications for both low cost airliners and full service carriers in the future.   To help me assess the
attractiveness of the industry I will be using various models such as Porter's 5 forces framework and Swot analysis.

One of the most basic techniques for analysing firm and industry conditions is SWOT analysis. SWOT stands for: strengths, weaknesses
opportunity and threats.   Swot analysis provides a framework for analysing these four elements of a company's internal and external
environment.   The strengths and weaknesses portion of SWOT refers to the internal conditions of a firm and opportunities and threats are
environmental conditions external to the firm (Dess, Lumpkin, Taylor 2006)

I will start by discussing the opportunities for airlines which were very good in 2001 for many reasons.   The most significant opportunity for
airlines pre 9/11 was Deregulation which occurred in 1978 which allowed US airlines to choose their...

2. Case 1 "Airlines"
Summary

This is a summary of the text "Chaos in the skies – the airline industry pre- and post-9/11", written by Gary J. Stockport. The case
study states the difference in the industry before and after 9/11, in terms of demand, cost factors, returns, full service carriers and
low cost carriers. 

The global airline industry changed rapidly the 11th of September 2001. Four aeroplanes were hijacked and three of them were
crashed into the towers of World Trade Center and the Pentagon. The airports across the country closed outgoing traffic and all US
and Canadian flights were paralysed. The global industry in fact was affected of this incident, mainly because US accounted for
around 40 per cent of the world air travel market. The industry was closed for three days and the total lost was estimated to over
US$300m. 

The year before the stock market suffered a crisis when the dot-com bubble burst. Now it was the sectors airlines and insurance
that dropped with around 50 per cent in theirs share prices. Financial markets around the world were also affected, for example
British Airways was down 33 per cent and Swissair more than 40 per cent.

Service is the main object in air travel. It is important to have fully booked flights because the cost to transfer an extra passenger is
very low. There have been some structural changes in the industry for the last decades. Better jet engines that make it possible for
longer routes and globalisation, deregulation, consolidation and technology improvements are main causes for structural changes.

The demand before 9/11 was very high mainly due to an increase in the number of retirees. Other aspects are the rise of world
GDP, increasing world trade and investment and the liberalisation of markets. Both fuel prices and labour costs rose significant
during year 2000. 

US airline industry had problem with net profit where its figures counted for only 1-2 per cent average compared to the US
industry average of 5 per cent,...

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