Aircarrier Industry Research

 Airline Market Analysis Article

Evaluation of the

Aircarrier Industry

Advertising Management

Show up II

December 8, the year 2003

Table of Contents

Environment………………. …………………………………………………….. several Demand……………………. …………………………………………………….. 6 Competition……………….. …………………………………………………….. several Product…………………….. …………………………………………………….. 9 Pricing……………………………………………………………………………. 11 Placement/Distribution……………………………………………….. …………. 14 Promotion…………………………………………………………………………16 Conclusions………………………………………………………………………. 17 References………………………………………………………………………... 19

The airline industry is facing one of its many challenging environments in history. A worldwide economic recession along with the terrorist attacks of September eleven, 2001 include led to a decrease in voyager traffic, decrease in revenue per mile flown, and rising labor costs. Additionally , a collapse in pricing electrical power and a shift inside the buying patterns of organization travelers, in conjunction with fierce competition from affordable airlines, will be forcing key airlines to restructure their operations or perhaps face the outlook of losing sight of business. The airline sector has responded to this hard environment by taking measures to lessen their costs. Airlines announced layoffs involving more than 100, 000 employees immediately following the problems. To make things worse intended for the market, the Faa (FAA) predicts only a gradual restoration in voyager traffic throughout the coming years. Environment

The U. S. airline industry went through a deregulation process in 1977. Prior to deregulation, 34% of most passengers would not have a range of selecting a great airline and domestic companies transported 240 million individuals annually (TIA. org website). After deregulation, 85% of all passengers in the U. S i9000. had a range of two or more service providers and traffic increased to 640 million passengers yearly (TIA. org website). The expansion in the quantity of passengers flying can be caused by increased competition, innovations in marketing & operations causing lower cost of flying, intro of new companies and improvements in service quality. The market became a perfect competition industry in that not one firm can influence the cost of the product, consumers (for one of the most part) see the products of most firms as perfect substitutes and consumers will get a product through the firm with the lowest price. In late nineties, during the technology bubble as well as the increased globalization of business, the aircarrier industry grew at an instant pace. Nevertheless , the industry has suffered several setbacks following experiencing that boom. Pummeled by poor profits and scarred from a terrorist attack resistant to the United States, the airline industry finds by itself on an unsure course. Below are travel expenditures (in $billions) for the U. S i9000. airline industry from 2000 through 2004 secured from the plunketresearch. com website. YearTotal Travel Expenditures in US$billions

2000563. 6th

2001527. a few

2002529. a couple of

2003estimate555. 6th

2004forecast583. six

In an already intensely competitive market, the inevitable industry-wide shakedown is having far-reaching results on the industry's trend to expanding home-based and worldwide services. Various international airlines are still partially owned by their respective nations, and treaties between nations determine which will airlines can easily land where. In 1992, the United States, within the continuing deregulation of it is airline industry, began signing " open up skies" treaties with other countries, which get rid of restrictions about routes and fairs. The us currently offers fifty-nine available skies treaties, including 11 with European Union countries. The us is presently negotiating with the European Union (15 members in total) about the same aviation agreement with all taking part nations that might allow any kind of US or EU airline to take flight to any level on both side of the Atlantic, without needing permission upon routes, fares or regularity of flights (Michaels, 2003, p. A3). The agreement could...

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