✈After researching the airline industry and writing about the different aspects of it for my past five blog posts, I would like my last blog post to end on positive note. I decided to research what start up companies and the airline industry as a whole can improve on.
Recently, many airlines have tried starting up to take the test to see if they could out-due some of the fierce competitors ( SouthWest, Delta, Jet Blue). These startup airlines such as SkyBus Airlines, Independence Air, ATA Airlines, and MaxJet couldn’t compete. With the rise of oil and gas prices it just seemed almost impossible. Since the prices are so high, most airlines would need to carry full planes to turn a profit, and smaller airports alone just don’t provide enough passenger traffic. Also even the domestic carriers are so established with their own hub airports. To get a gate inside one of these airports is highly unlikely. The market seems to be one sided. If you aren’t already in then the chances of getting in the industry are slim to none. According to the Trade Group Airlines for America, “losses by the nation’s passenger airlines from 1979, the year the industry was deregulated, to 2000 were twice as large as their combined profits in that period. In the last decade, domestic airlines lost a combined $60 billion as higher fuel prices forced painful restructuring, bankruptcies and mergers”. This is horrible information for the industry, leaving a large gap in ways to improve. Warren Buffet (who once called an investment in US Airways in the early 1990s one of his biggest mistakes) himself even said, “Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” If Warren Buffet, an intelligent, well respected man said this then the industry seems hopeless to enter into at this point.
One thing good can come from a seemingly hopeless industry…room to improve, but only for the major airlines in the industry. Entering the industry isn’t impossible, but you will most likely loose large sums of money and your valuable time will be wasted. So if there is one thing that you could get out of this blog, it would be not to invest or enter the airline industry. I enjoyed writing and researching this industry. Till next time. ✈
– Thomas Murphy
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Information acquired from :
Mouawad, Jad. “Start-Up Airlines Face Big Obstacles.” The New York Times. May 25, 2012. Accessed April 10, 2018. https://www.nytimes.com/2012/05/26/business/start-up-airlines-face-big-obstacles.html.
Costello, Caroline. “10 Things All Airlines Should Do.” USA Today. January 01, 2014. Accessed April 10, 2018. https://www.usatoday.com/story/travel/flights/2014/01/01/airline-amenities-service/4265995/.
Winship, Tim. “On-Time Flights? Sometimes, but There’s Plenty of Room to Improve.” SmarterTravel. January 18, 2017. Accessed April 10, 2018. https://www.smartertravel.com/2017/01/18/time-flights-sometimes-theres-plenty-room-improve/.