This website uses cookies to ensure you have the best experience. Learn more

Airline Industry Essay

626 words - 3 pages

As shown on the income statement the profit margin has been negative in the airline industry since 2000. However, in 2006 U.S. airlines generated an operating margin of 4.6 percent on operating profits. After factoring in $4.1 billion in interest expense, $653 million in income taxes and $301 million in miscellaneous non-operating income, the industry posted net earnings of $3.0 billion and net profit margin of only 1.9 percent. This was well below the average for U.S. corporations. In 2006 things started changing for the airline industry. In 2006 passenger airlines utilize nearly four fifths of the seating capacity. Also, rising passenger yield and aggressive cost control drove the average break-even load factor down four points to 79 percent. While that threshold remained weakly high, allowing for only the slimmest of profit margins (


U.S. airlines ...view middle of the document...

6 percent. In 2006, system wide available seat miles (ASMs) rose only 0.3 percent – the slowest pace since 2002. Domestic ASMs fell 1.5 percent. In contrast, international ASMs raised 5.8 percent as many carriers continued to reorient their networks toward more profitable overseas markets. With RPMs growing nearly eight times as fast as ASMs, industry capacity utilization gained another 1.6 points, reaching a modern record of 79.2 percent. The average domestic load factor rose 2.0 points to 79.0 percent; the average international load factor rose 0.4 points to 79.9 percent. It is interesting to note that, domestically, the industry filled a substantially greater share of its seats than it did just five years earlier, only to achieve the most modest of profit margins (


[pic] [pic]

Industry operating revenues increased 8.3 percent to $163.8 billion, on the heels of solid growth in passenger, cargo and additional revenues, and against a backdrop of 3.3 percent growth in real U.S. gross domestic product (GDP). Passenger revenue increased 8.2 percent as traffic growth was accompanied by a 5.7 percent gain in system wide yield, this lead to the largest jump in yield since 1988. Domestic yield rose 5.7 percent, its biggest leap since 1993, and international yield went up for the fourth consecutive year of growth, at 6.2 percent, its largest gain since 1988. These advances in pricing strength played an instantly recognizable role in repairing industry finances after years of soft demand. In turn, passenger revenue rose up to 0.75 percent of U.S. GDP, a modest bump from 2005, but still well below the pre-9/11 average of 0.95 percent. That gap, applied to the nation’s 2006 GDP, translated to $26.5 billion in “missing” passenger revenue for
U.S. airlines (
The airline industry market has had its ups and downs, currently the airline industry is in the positives of making profit. The battle of keeping up with the positive profit margin, especially in the current economy will be a challenge. Although, with cuts in unnecessary cost can result the airline industry to be successful.


Other Papers Like Airline Industry

Airline Industry - A Study Essay

2269 words - 10 pages AIRLINE INDUSTRY A STUDY ECO 203 NYC ROSA MARIA MAGPANTAY, RN, BSN, CCRN INTRODUCTION Since the inception of flight in 1903, air travel industry has been a crucial means of transportation for people and products. The invention of the first aircraft hundred-plus years ago brought about a revolution of how people travel. It has been a dynamically changing industry. Air travel remains a large and growing industry. It facilitates world

Industry Analysis on Airline Industry

1115 words - 5 pages Industry Analysis The Airline is one of the major industries in the world today and is majorly affected by Michael Porter's Five Forces model. In case of the Airline industry, this is the most important force today, especially since the market is completely saturated. There are more service providers than needed in both local as well as international markets. The airlines are continually competing against each other in terms of prices

Price Discrimination, Airline Industry

2929 words - 12 pages Same point of departure, same destination, the same snacks. Why is it people sitting next to each other on the same flight can pay such different amounts for their tickets? Airline pricing seems to be a great mystery. The airline industry refers to their pricing game as “yield management” or “revenue management.” Meaning prices on the same plane can fluctuate widely based on available seats at the time of purchase. Even though this seems to

Overview of Airline Industry

2448 words - 10 pages Overview of Airline Industry Air travel has grown in the past decade. Travel grew strongly for both leisure and business purposes. India will have nearly 800 to 1000 airplanes by 2023, it was estimated by Airbus. In spite of growth between 30 to 50 per cent in Indian aviation industry, losses of approximately 2200 crore is estimated for the current year. During 19991-1992, Modiluft, East West and Damania went bankrupt. Air Sahara and Jet

Analysis of European Airline Industry

3723 words - 15 pages AN ANALYSIS OF BUDGET AIRLINE- ‘RYANAIR’ Module Name: Management and Strategy (MBA INTERNATIONAL) Module Reader: Claire Devlin Student Name: Varghese Jacob Student Number: 8202730 Date: 16/03/2007 Introduction Air line Industry can be called as one of the biggest industry in the world. In that huge industry European Airline industries part is very high. European Airline industry consists of

Airline Industry Breakup of Velvet

1621 words - 7 pages successfully airline management need to understand the key drivers of the airline business which have certain peculiarities. An airlines customer base is fragmented and needs to catered for in very different ways. Two exist, passengers, (primarily business travellers and tourist (be they casual or package booked) and then the moving of freight. The industry is then highly impacted by external sources, e.g. how the tourist industry is run and

Five Forces Model of Airline Industry

1235 words - 5 pages Five Forces model of Airline Industry Air travel has changed the way people live and experience the world today. The airline industry is a strategic sector that plays a fundamental role in the globalization of other industries since it promotes tourism, world trade, foreign investment and, therefore, leads to economic growth. However, all airlines within the industry operate in a highly dynamic environment where various legal, social

Competitive Advantage In The Us Airline Industry

5037 words - 21 pages Competitive Advantage in the US Airline Industry The GREENair Strategy Executive MBA in Business & IT Class of 2014 Module 4 - Strategy & Organization - Assignment Author: Luís Faria Reviewer: Prof. Dr. Isabell Welpe Competitive Advantage in the US Airline Industry The GREENair Strategy Subject Page Module 4 - Strategy & Organization - Assignment 2/17 Abstract The US airline industry experienced many years of difficult and had

Strategic Commitment in the Airline Industry

2244 words - 9 pages ABSTARCT: This report aims to give a brief understanding of strategic commitments, the rationality of predatory pricing and the extent to which predatory pricing strategies are used in the global airline industry. DATE: 5th March 2015 Introduction This report aims to give a brief understanding of strategic commitments and the rationality and extent to which predatory pricing strategies are used in the global airline industry. The

The Airline Industry in 2001 - 2004

1166 words - 5 pages Plane Wreck: The Airline Industry in 2001 - 2004 Between 2001 and 2003, players in the global airline industry lost some $30 billion, more money than the industry had made since its inception. The losses were particularly severe among the big six airlines in the United States (American Airlines, united, Delta, continental, US Airways, and Northwest). In 2002 these major airlines lost $7.4 billion and another $5.3 billion in 2003. Both US

From Protection To Competition – The Deregulation Of The Airline Industry

1963 words - 8 pages 1.The importance of airlines to their home countries as a reason for their protection (flag carriers, military considerations)For a long time the airline industry was treated as a special case in the international business. The aviation sector was subjected to different rules and held to different standards.One reason for this special status was the national defense. Under programs such as the U.S. Civil Reserve Air Fleet (CARF) plan, civilian

Related Essays

Airline Industry Essay

804 words - 4 pages 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

Airline Industry Essay

2458 words - 10 pages PAGE PAGE 1 Airline Industry The airline business has been in existence for over 75 years. There have been many ups and downs in this particular industry's economy. While history has shown that over 140 airlines have declared Chapter 11; only a few airlines have truly emerged. At Present, the U.S. airline industry is facing a financial crisis and the outlook is bleak. The airline industry crisis was dramatically accelerated by the

European Airline Industry Essay

952 words - 4 pages The European Airline industry has gone through a lot in the past century since the establishment of the first public airline after the World War I. Until a few decades ago most of these airlines were national and at least partially state owned, and most of the European countries had at least one, with direct government control. Significant change in this only came in the 1990’s with the appearance of the low cost airlines. While the business

U.S. Airline Industry Essay

626 words - 3 pages On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive. Rivalry is one of the main issues in this industry. While rivalry may not typically doom an industry, the airline