MGMT 331Transportation Principles From the module resources

MGMT 331-Transportation Principles

From the module resources and your research, we know the airline industry has had its challenges over the past few years. Several trends have contributed to the industry\'s bankruptcies, mergers, and buyouts. For example, oil prices are increasing, and global traffic growth is expected to slow in 2017, according to the International Air Transport Association (IATA) - a slowdown that is particularly likely if the Gross Domestic Product (GDP) growth remains sluggish. Discuss For this discussion chose an article (or video) on current trends in the airline industry. Link your video/article in your post with a summary and your analysis of how these trends can affect competition and profits for organizations. Do you think deregulation has attributed to these trends? Why or why not?

Article: http://aviationweek.com/commercial-aviation/five-key-trends-affecting-commercial-aviation-next-20-years

Solution

The five trends discussed in the article are as follows:

One most common reason behind all these trends is the increasing competitions and fare wars to reduce the price of the seats. In this story, the lower fare rate and high profit is planned to be achieved by increasing the operating efficiency by means of the increase in operational efficiency of the efficiency. Some of the measures steps in this direction is to use fuel efficient low maintenance aircrafts for the existing routes and using the smaller aircrafts for new routes to avoid the overcapacity. Competition will bring down the prices but a focus on operational efficiency and profit per seat will prove to be a deciding factor in the success of the airlines.

Deregulation has an effect on this. Deregulations increased the competition and thus increase the fare war. Deregulation allowed airlines to search for new possibilities by entering into the areas where other players are dominating by offering low cost services to attract the customers.