Analysis and Recommendations for the Airline Industry

The current failures are most affected and influenced by competition, buyer power, technology, and the economy. While it is evident that the airline industry is suffering as a whole, there is one airline that is flourishing with achievement amongst the failing industry. Southwest airline’s unique way of operating has generated a consistent profit throughout the most influential factors that affect the industry. Compositionally among competitors within the airline industry is an extremely important aspect. With more competition within the industry, consumers will experience more benefits.

Advantages such as lower ticket prices and less intention will cause potential financial problems for the consumers. As many of the major competitors within the industry actively take steps to overpower other airlines, we as consumers may begin to feel the effects. Major Players in the Industry domestic Airline Industry consists of many different competitors, some that are more successful than the others. At the current time the leading competitors in the United States include Delta Air Line, American Airlines Corporation, United Airlines Corporation, Southwest Airlines Company, and US Airways Group Incorporated.

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These five Airline companies make up nearly 50% of the Market Shares within the Industry with Delta owning the largest portion of the market shares. Of these five Airlines, the only one that has been consistently profitable within the last five years is Southwest Airlines. The other major US airlines have proven to experience unstable profitability. (IBIS world)Mergers and illimitableness the past years airline companies have begun to strategies on ways to be more successful against their major competitors. Due to the rising prices of fuel, the costs associated with operating an airline have continued to increase.

One action airlines have decided to take is to merge with other competitors. This action is one that can increase profitability and the airline’s long term finances by eliminating duplicated operating costs. (GAO gob) The most recent merge in the U. S. Is that between Delta Air Lines and Northwest which took place in 2008, making it the only alliance in the United States to include financial integration (national academic press). (IBIS world) The merge successfully helped Delta become the largest provider of air transportation by combining the Northwest flights with the Delta flights. National academic press) These flights were originally half full; therefore, the hose starting to occur, there will be less competition within the airline industry, resulting in higher revenues for the airline companies as well as higher ticket prices for the consumer. (refinance Journal)Other airline companies have decided to create a partnership or alliance with other airlines rather than to merge. These alliances most commonly occur between an airline that is stationed within the United States and foreign airlines (ICQ weekly).

The difference between a partnership and a merge is that the airlines do not share finances, but are connected through code sharing booking codes assigned to a flight) or frequent flier miles. Alliances make it possible to book a flight through a US airline and connect to a foreign airline such as Airframe to fly from city to city within France. Alliances can increase the number of travel options that consumers have as well as create a common financial interest among many airlines. (ICQ) With separate airlines sharing similar interests the competition among the airline industry will decrease.

Some of the most successful airlines in the United States that have participated in such partnerships include Delta, American Airlines and US Airways. Lbs)Succulents the current state of the airline industry, one aspect of competition that is extremely relevant is the threat of the successful airlines who operate with a low-cost low-fair method. Southwest airlines primary focus is to overcome their competitors by providing lower fairs, one class flights, and point-to-point flights (understanding business). This strategy has brought Southwest a net income of $178 million in 2008 (southwest fact sheet).

Southwest has been more successful than any other of its competitors in the past five years. (see appendix). BUYER Powerhouse Power is a very significant aspect of the United States airline industry. This refers to the amount of pressure the consumers put on an industry that affects the prices, volume, and profit potential. (Porter, M 1998, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, Texas) The industry is highly competitive and therefore there are many different choices of airlines. Many airline companies exist in the market, however, each of these companies do not differ much from one another.

Each company is virtually offering the same service to the consumer so the main aspect affecting buyer behavior in the industry is price. This makes buyer power very high because the consumer is able to choose a flight from a variety of different companies based on which fare is the cheapest. As time has passed, buyer power has become increasingly important in the airline industry. The invention of the internet has allowed for a convenient and easy way for the consumers to compare prices and choose based on the cheapest. Whew)The main components of demand for airline services are business travelers, tourism, freight transport, and mail transport. ( ). With the development of new technology and electronic commerce, travel has emerged as the top selling product inline and is increasingly growing. (http://academic. Mantel. Com/Sinatra/ view’=reports_substrate=119043, 153612=sub_itemsC=4000/display/ id=417691 This gives the buyers in the airline market a huge advantage and higher power to choose and control when analyzing the marketing strategies and programs being adapted in the airline industries.

According to business wire’s May 2007 issue, when asked about industry impact in a survey 75% of the us airline companies rated customer loyalty as having the greatest impact from a cost, revenue, or operational standpoint. (http:// www. allbLiabilities/sMomvices/business-services/4338964-1 . htmlHTMLcause the buyers have such an impact on the airline industry, the individual companies are focused on getting and keeping loyal customers that will continue to travel with that company even if the price rises. For example, frequent flier miles are a program that many airline companies have enacted to ensure customer loyalty.