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Us Airline Industry Case Study


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The US Airline Industry in 2007

Vision Framework


: This is an Airline industry.


The US airline industry is looking for Expansion of routes by achieving economies of capacity utilization. The industry is also keen to avoid destructive price competition and continue profitability in the long run.

Strategic Intent

: Airline industry wants to be the best in providing world class transportation facility and build customer loyalty by differentiating their offerings.


: To establish the industry in a sustainable position by the virtue of high customer loyalty and to provide faster transportation.

Key Issues


Choosing between cost reduction offer and differentiation service.


Making a fair treatment between long-suffering shareholders and customers.


The rise of fuel prices after the 9/11 attack.


- To hold on to the period of profitability that came after 5 years (2001-5) by achieving high load factor.

- To earn as much revenue as possible on each flight through proliferation of pricing categories and surplus of special deals.

PESTEL Analysis (Macro Environment Analysis)

Industry: US Airlines Industry, Time Frame: 2003-2007 (5 Years)

Political Factors

The condition is stable.

Economic Factors

The incident of 9/11 had suffered a great overall loss which caused the oil prices go up. And for this the airlines industry had suffered a lot.

Sociocultural Factors

Over the years, there has been a lot of spending on infrastructures and for this people tend to go for other means (bus, trains) to travel long distance. However, some forecasts predicted the


The airline industry provides many illustrations of the concepts and techniques described in this book. It is a major industry comprising a large number of firms of various sizes. Some airlines offer only local or national services, but many operate internationally. In the 1990s airlines face the challenge of competing profitably in a rapidly changing environment. Against an underlying trend of increased airline travel, demand is subject to marked fluctuations. In 1991 economic recession coinciding with the Gulf War caused a substantial reduction in the demand for airline travel. Increases in the price of oil have a significant effect on airlines’ costs, as in the future will demands for reduced pollution. Airlines have been subject to extensive regulation by governments and have had to cope with many changes in the regulatory framework. In recent years the trend has been to reduce the degree of regulation. In 1978 the US market was the first to be substantially deregulated. Deregulation has also occurred in Canada and Australia, and in the EC as part of the implementation of the single market.

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