Airline Management Report: Strategies and Trends Analysis

This report offers a comprehensive review of the airline industry, evaluating its economic and business trends, and providing an analysis of the impact of the COVID-19 pandemic. The report begins with a critical assessment of the industry's financial performance, referencing the views of Warren Buffet and highlighting the challenges of generating consistent profits. It then examines relevant business and economic trends, with a focus on the significant impact of the COVID-19 outbreak on the aviation sector, including the decline in share prices and flight cancellations. The report includes a figure illustrating the estimated financial impact of the pandemic. Finally, it discusses various airline strategies, such as cost reduction through low-cost carrier models and fuel efficiency, and the need for innovative operational changes to ensure survival and future growth in the face of the pandemic's challenges. The report concludes by emphasizing the importance of adapting to current market conditions to maintain and boost travel arrangements.

Running head: AIRLINE MANAGEMENT
Airline Management
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Review of the Airline Industry.......................................................................................2
Relevant Business and Economic Trends......................................................................2
Airline Strategies............................................................................................................4
Reference........................................................................................................................5

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Review of the Airline Industry
The aviation sector has also been an important sector for any economy as this brings
about foreign income in the form of travel and also connects an economy globally. However,
from the perspective of making an investment, the airline industry is not suitable as per the
opinion of CEO of Warren Buffet. One of the criticisms which was put forward by Warren
Buffet’s CEO was that Airline industry requires significant investments for maintaining its
operations but are not able to generate desired amount of profits and in some cases sustain
losses for long periods. In such a situation, the investors who are making investments in such
an industry often suffer (Business Insider, 2020). The period of losses for such airlines is not
isolated but the same continues which yields negligible returns on investment which are made
by the investors. Another criticism which was charged by the CEO was that low cost carriers
are hampering the market and therefore investors are at a loss if high investments are made in
such are industry (Hazel, 2018). In addition to this, other facts were also laid out by the CEO
of the company which are solid facts and therefore it can be said that the airline industry is a
risky investment especially considering the recent market conditions.
Relevant Business and Economic Trends
The airline industry has always tried to ensure that quality services are provided to the
customers and the focus of airlines companies has always been on volume of the customers
travelling. In terms of market analysis for the industry, it was going smoothly as growth in
the passenger travelling was anticipated due to the introduction of low cost carriers and fuel
efficient system which was installed in the same. However, the recent outbreak of pandemic
COVID 19 has severely impacted the aviation industry on a global basis. The financial
markets have also reacted in strong manner to the anticipated losses as Airline share prices
have fallen nearly by 25% which shows the reactions of the investors. The flights are

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cancelled and pre bookings which were made by the customers are also being cancelled due
to the wide spread impact of the COVID 19 virus. A rough estimate of the impact of the virus
outbreak on the financial market for airline sectors is provided below:
Figure 1: (Estimated Impact on Business)
Source: (Iata.org., 2020)
The above table makes it clear that the financial market would contract for airline
industry and it would be difficult for such companies to maintain their previous level of
operations (Rizzetto, 2018). The business which is currently operating in Airline industry
must think to survive in the market so that they can sustain growth in future period. On the
basis of the present market trends, the airline sector is anticipated to a broader impact leading
to a $113 billion loss of revenue in the coming years. The different companies needs to frame
strategies so that they can survive in the market.

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Airline Strategies
The strategies which are adopted by airline industry aim to ensure that the costs are
kept low and the business is able to serve more and more passengers. The airline industry
also aims to ensure that the costs of operations are optimized to the best of levels so that fair
prices can be charged from the customers. In the recent market conditions, the business
operating in airline sector only needs to think of survival and therefore low costs approach
would be the best option available to the management.
One of the approaches is the introduction of low cost carrier models which can help a
business to lower the costs down significantly and make the travel arrangements possible for
all classes of people. In the recent turn of events, the prices of fuel have been continuously
falling due to the pandemic disease and therefore, this would be providing some comfort for
the airline companies (O'Connell & Williams, 2016). However, it is also to be considered that
such companies would not be attracting passengers initially after the market stabilizes as it
used to and therefore proper policies needs to be formulated so that business are able to again
boast travel arrangements. One other approach for the business would be to reduce
unproductive costs and bring about some innovative changes in the operations of the business
so that more revenue can be generated.

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Reference
Business Insider (2020). . 7 ways Warren Buffett blasted the airline industry before investing
billions in it. Retrieved 18 April 2020, from https://www.businessinsider.com/warren-
buffett-blasted-the-airline-industry-before-investing-billions-in-it-2017-3?IR=T
Hazel, R. (2018). Airline capacity discipline in the US domestic market. Journal of Air
Transport Management, 66, 76-86.
Iata.org. (2020). IATA Updates COVID-19 Financial Impacts -Relief Measures Needed
Retrieved 18 April 2020, from https://www.iata.org/en/pressroom/pr/2020-03-05-01/
O'Connell, J. F., & Williams, G. (2016). Air transport in the 21st century: key strategic
developments. Routledge.
Rizzetto, A. (2018). Economics of the airline industry-The Alitalia bankruptcy case: a
review (Bachelor's thesis, Università Ca'Foscari Venezia).