Comprehensive Report: Airline Industry Analysis and Future Prospects

This report provides a comprehensive analysis of the airline industry, examining key aspects such as the intense competition between Boeing and Airbus, the diversification of aircraft, and the evolving passenger experience, including cabin density and seat comfort. It delves into the financial challenges faced by airlines, including capital requirements, reduced profits, and the impact of deregulation and rising fuel costs. The report also addresses ethical issues like cramped seating, false advertising, and discrimination, as well as external factors such as geopolitical events (Qatar's flight ban) and technological advancements that influence the industry. The analysis covers profitability trends, technological changes, and the need for airlines to adapt to market dynamics. The report references several sources to support its claims and provides a well-rounded overview of the current state and challenges of the airline industry.

AIRLINE INDUSTRY 1
Airline Industry
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AIRLINE INDUSTRY 2
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a.
As the competition continues being intense between Boeing and Airbus in providing carriers that
meet the global demand by the airlines, diversified carriers have been produced. Boeing has faced
increased competition from Airbus since the 1970s and that has seen the family of aircraft expand
(Campos, 2001). As of stoday, Airbus is competing in areas that were once the stronghold of Boeing. In
2003, Airbus delivered more planes than Boeing for the first time. In 2007, Boeing won more orders as
compared to the Airbus (Hollinger, 2015).The A320 was selected by more than 222 operators and is now
gaining ground as it is becoming popular among low-cost operators compared to the Boeing 737.
b.
The business class passengers are accustomed to having a fully flat bed and those using the economy
class have little to enjoy in the recent past. As the search for increasing the cabin density among the
airlines continues, the economy class has seen more comfort with the introduction of wider seats that
seem to generate more comfort as the passengers can turn and move their legs. (AirlineTrends)The
Mexican carrier, on the other hand, has introduced the super diamond that has better specifications
regarding offering larger space and more privacy and is similar to the airways found in Qatar such as
787s that offer live channels on a 18inch touchscreen on high definition screens. Airlines are ordering
large crafts to accommodate the many specifications that cater for the needs of their passengers
regarding space and privacy in some planes. The large seats in economy class require a large plane.
c.
Capital requirements in the airline industry are overwhelming, the profits seem to be reduced, and
the reputation seems tainted according to a flying specialist Boyd. Airline companies such as Skybus
Aircrafts and Ata carriers have fizzled, and even the Virgin America which is the best failed to realize
significant benefits I the first five years with its initial flights (Porter, 2008). In 1979 there was
deregulation of the airline industry a move that saw misfortunes accompany airline carriers. Recently,
more than $ 60 billion was lost by the domestic carriers due to the increased costs of fuel leading to
insolvencies of some airline companies and others merging.
d.
A myriad of challenges exist for the airline industry, for instance, there has been substantial
pressure to improve operational efficiency, and thus financial performance has become a critical factor
in defining the success of the airline. Airlines are becoming more radical about the business that they
need to carry on and the routes to continue serving. Such choices depend on the understanding of the
economics of the business and the desire to embrace ideas that are unconventional (Egon
Management). In such an industry, there is the need for greater flexibility and adaptability of the

AIRLINE INDUSTRY 3
business model to the dynamic needs of the market. The CEOs are thus tasked with the duty of
transforming their enterprises into profitable businesses with long-term missions.
e)
wine and brandy
Bakery products
Engines & turbines
Book publishing
Laboratory Equipment
Oil and Gas Machinery
Soft Drink Bottling
Knitting Mills
Hotels
Catalog,Mail-order Houses
Airlines
13.90%13.80%13.70%13.40%13.40%12.60%11.70%10.50%10.40%
5.90% 5.90%
profitabilty
profitabilty
The above table shows the profitability of airlines declining as compared to other industries showing
how the airlines are cutting down their prices with an aim of ensuring relevant and also due to the rising
cost of fuel.
2. a)
While profitability is the sole objective of most businesses, IATA reports indicate that in 2010,
airlines made more than $ 7.9 billion in profits. However, the airline industry is still grappling with some
ethical challenges in their way to make profits. The issue of cramping seats seems to be a matter of
concern where airlines place many seats in the planes as the plane can accommodate (Williams). Such a
practice is uncomfortable, and passengers are at risk of developing some medical problems such as
having blood clot due to the failure of muscles to contract. The issue of false advertisements is also
another ethical matter of concern for airlines. In one of the traveler’s website, a round-trip from Newark
to London had been priced at $236 only for the passenger to realize that it was $803 after inclusion of
tax and fuel charges. Lack of honesty is the factor that makes most airlines to pay lower amounts for
commissions by the travel agents.
b)

AIRLINE INDUSTRY 4
i)
Of late airlines are still grappling with the challenge of unsustainable air transport. In the past few
months, airlines from Qatar faced a huge loss regarding passengers when the country was banned
together with its flights to the Gulf countries over some diplomatic issues. Doha, the capital city of Qatar
where most flights and airports are located facing the crisis, and the tussle is still on-going. It is crucial
for the countries to discuss and solve their issues amicably to avoid hurting the airlines business in the
region. The other day following the hurricane Irma, FAA had to come up with concrete strategies that
helped calm the situation in airports delaying most flights, and others were banned for that day
following the crisis (Garsia, 2017). In most cases, issues to do with bad weather are dealt with using
having appropriate infrastructure that forecasts weather patterns, and in the case for instance of
hurricane Irma, most of the airports had been warned and were prepared. However, airlines should be
concerned about the weather changes as it affects their scheduled flights and in some cases that are
unforeseen may have devastating effects where planes have accidents, and there is massive loss of life.
It is therefore important to have the necessary equipment in airports that forecast weather patterns.
ii)
The technological changes in the airline industry seem to impact the industry in a big way. Many
courses have been abandoned leading to higher charges and provide avenues for other flights to
venture into the business with reduced prices for instance in 1971, saw Southwest Aircrafts adopt such a
strategy. The high oil costs are also making many airlines to have their planes full.
iii)
The issue of discrimination is an ethical problem that faces most airline companies, and in most
cases, the passengers are neglected. Prejudices occur in the stakeholder's groups as evidenced in one
occasion in Hungary where one woman died after being denied two seats due to her size. The woman
had diabetes and wanted to catch her plane home (Williams). However, she had been denied the seats
on various occasions, and according to the husband, he claimed she died because she could not attend
her medical treatment since she was declined on many instances.
References

AIRLINE INDUSTRY 5
AirlineTrends. (n.d.). Cabin/Seats. Retrieved October 8, 2017, from AirlineTrends:
http://www.airlinetrends.com
Campos, L. (2001). On the competition between Airbus and Boeing. Air and Space Europe, 11-14.
Egon Management. (n.d.). Egon Zehnder - Global Passenger Airline Market: Five Megatrends and their
Implications for Talent Management. Retrieved October 8, 2017, from Egon Zehnder:
http://www.egonzehnder.com
Garsia, M. (2017, September 22). How the FAA keeps US airspace on track in a crisis. Retrieved October
8, 2017, from tnooz: http://www.tnooz.com
Hollinger, P. (2015, JUNE 12). Boeing and Airbus face mammoth task to clear order backlog. Retrieved
October 8, 2017, from Financial Times: http://www.ft.com
Porter, M. (2008, January). The Five Competitive Forces That Shape Strategy. Retrieved October 8, 2017,
from Harvard Business Review: http://hbr.org
Williams, T. (n.d.). Business Ethics for Airlines. Retrieved October 8, 2017, from azcentral:
http://yourbusiness.azcentral.com