Room to Improve

✈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/.

 

Industry Threats

✈In my previous blogs I talked about how well the airline industry was doing and how there are barriers of entry as well as digital marketing. But as good as it sounds, the airline industry has issues and concerns just like many other industries.

Image result for southwest

One of these issues being the threat of new entrants. As I mentioned before, it seemed like the airline industry was challenging to get into, but like many others I was fooled. With more information being acquired, I learned that it is possible to receive a loan from the bank depending on how substantial the costs would be to access these loans  and credit. If borrowing becomes cheap, then there will be more airlines entering the industry. Saturation would then begin because of the numerous airlines. Although saturation could occur, well-known airlines would be able lure in flyers with their frequent flier points and other promised incentives even though their prices may be higher.

With more airlines coming in, rivalry comes along with it. Highly competitive industries usually earn low returns because of the amount of competition. With all of these competitors the industry might take a turn for the worst especially if the economy is struggling. Is it possible that the world turns to another way of efficient transportation? What about substitutes? Depending on how far the trip is, people will travel via automobile or train. If the economy falls and airline prices rise, the average working person will not be able to afford taking a flight. Now this normal good turns into a luxury good.

With all of these airline issues becoming a part of the industry, performance itself is another reason why some do not travel. According to the 25th annual Airline Quality Rating (AQR) study released on Monday, commercial airlines “collectively declined” when it came to four key factors: On-time performance, involuntary denied boardings, mishandled baggage and customer complaints. For instance, recently a women was physically dragged off of a South West airline because it was overcrowded. A problem like this promotes bad business and a decrease of flyers in the airline industry.

With threats to the industry who knows where it may be in the next ten years. Hopefully the industry scales up and solutions will be made to solve these prominent issues.✈

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Information acquired from :

Rosenblatt, Kalhan. “Southwest Airlines Apologizes After Video Shows Woman Being Dragged off Plane.” NBCNews.com. September 27, 2017. Accessed March 22, 2018. https://www.nbcnews.com/storyline/airplane-mode/southwest-airlines-apologizes-after-video-shows-woman-being-dragged-plane-n805111.

Kennedy, Bruce. “It’s Not in Your Head: Airline Performance Is Declining.” CBS News. April 13, 2015. Accessed March 22, 2018. https://www.cbsnews.com/news/its-not-in-your-head-airline-performance-is-declining/.

“The Industry Handbook: The Airline Industry.” Investopedia. March 30, 2017. Accessed March 22, 2018. https://www.investopedia.com/features/industryhandbook/airline.asp.

 

 

A New Age of Marketing

✈In my last few blogs I discussed the broad sector of the airline industry. This blog will be more specific and based on digital marketing. Before advanced technology, the airline experience as a passenger was not always enjoyable. Pre-travel, Check-in, Airport services, Lounges, gates and boarding, and air travel became much easier as technology grew. You couldn’t book your flight on your phone or solve any other last minute flight issues. Now a days advanced technology gives passengers the freedom to book flights and gives a better overall experience. There continues to be a rapid increase in air travel, which makes it a very profitable industry to be in. Air travel numbers themselves are overwhelming. Published forecasts predict the total  number of people flying on U.S. airlines will increase from 745.5 million and grow to 1.15 billion in 2034. How could these projected numbers increase so rapidly? A key reason is because of digital marketing.✈

✈The rise of Airport and airline apps along with the passenger experience had some people wondering whether or not digital displays would be only a quick trend. It turns out that smartphones and digital displays actually went hand in hand. A good example is Qantas, who established a digital experience called Qview. This allowed premium passengers to sync there tablets or smartphones to the digital screens inside the lounge while waiting for their flight.  If a passenger is watching the or reading the news on their tablet, for example, it can also be displayed on the digital screen in the lounge. Also with real-time gate and boarding information right next to it, meaning all the information they need can be found in one place.

Boarding accessories with digital display also give the passenger a more efficient experience. By wearing your smartwatch or apple watch, you can now scan your boarding ticket or gate information faster. The digital experience gives the user power. They can control the interface rather than just scanning a piece of paper. With online reservations and technology continuing to grow, the airline experience not only helps the customers but the industry as a whole. Sensor based modeling also helps the airport flow more efficiently. The sensors predict the amount of traffic flowing in and out of the airport. What does this mean? This means that the airport can schedule the right amount of workers to ensure that the airport traffic does not build up and cause a less enjoyable experience. ✈

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Information acquired from :

Power, Rene . “Digital Marketing in the Airline industry.” Smart Insights. December 01, 2016. Accessed March 12, 2018. https://www.smartinsights.com/b2b-digital-marketing/b2b-strategy/digital-marketing-in-the-airline-industry/.

Entrepreneurs and The Airline Industry

✈The airline industry first came on to the scene around 1925. Because of how dangerous planes were before the 20th century there was no market for the airline industry. During 1925, the Air Mail Act allowed the development of the airline industry by allowing postmaster to contract with private airlines to deliver mail. Right after, the Air Commerce Act gave the Secretary of Commerce power to establish airways, certify aircraft, license pilots, and issue and enforce air traffic regulations. The first commercial airlines included Pan American, Western Air Express and Ford Transport Service. Within 10 years, many modern-day airlines, such as United and American, had emerged as major player.

An important question to understand is why were airlines even established? What was the need? The need was for the people of the world to be able to get to a particular place in a short amount of time. There will always be a need in the airline industry. People don’t want to drive across the country or sail across the world to get to their destination. In my opinion, the industry will always be around unless flying cars begin to take over the market. Most U.S. airlines are privately owned and not influenced by the government. Because of this privatization, on the entrepreneurial side of things, this allows for individuals and companies to create certain products or airplanes that efficiently help the industry as a whole rather than having government regulations in certain sectors of the industry. This would open up for entrepreneurs and like minded people to create safer and more efficient systems causing more people to take flight. The more people that fly results in more revenue for that specific airline. According to tech.co, a site where entrepreneurs can list their ideas and start ups, there have been many influential aviation ideas. For example, one start up that has taken off is called AEG Fuels. This fueling service allows for the planes to efficiently fuel up. Relating what we have been learning in class to the airline industry- the entrepreneurial mindset has to be there to even start up a product or airplane enhancement. Without the correct mindset an entrepreneur will fail.  If an entrepreneur has a fixed mindset then failure becomes more evident than success. Because of the many entrepreneurs out there, the airline industry has taken off. Feel free to comment and share! ✈

Image result for AEg fuels

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Why read this blog?

✈️I’m not here to waste your time or your money. There are no products being sold or advertised. No fake news or inappropriate content will be presented. So what’s the reason for this blog? This blog will further your understanding of the airline industry. Weather you are a five star pilot or the average Joe, everyone who reads this blog will gain quality knowledge about the airline industry and airplanes as a whole. A lot of people have flown in the sky or have rode in an airplane, but most don’t realize the process that goes along with it.

This blog will be a place where anyone can come and gain a quick fact or two while being able to comment and interact with others. The airline industry resonates with me because throughout my life my family and I would travel to different locations via airplane every year during the summer. I always overlooked over how important airplanes were for travel and life. Without the airline industry and firms involved, timely travel would become more difficult. My curiosity of the airline industry, will provide unique content to any viewer.

Over the years the airline industry has taken a hit because of 9/11. Since this infamous event, the airline industry has been trying to recover. Airline carriers include Delta, American, and United Airlines, etc. According to the Center of Responsive Politics, “Terrorism fears, security costs, and fluctuating fuel prices caused revenues to decline and drove some U.S. carriers into bankruptcy”  Because of these attacks, people become afraid of riding on these airlines, causing the downfall of the industry. Less customers equals less revenue. The industry is expensive to run to begin with. A low-budget airline company can start up for around two – three million dollars. Sometimes airlines can’t compete with each other and have to merge together to become profitable (Delta & Northwest).

Image result for 9-11

Throughout this blog, the industry will be explained more thoroughly and efficiently allowing you, the reader, to gain a better understanding of how an airplane functions and operates along with its industry. I hope you can learn something new every post and will interact with others. I am also open to any comments or concerns. Can’t wait to grow this blog. You can reach me on twitter @Entrblog. ✈️

-Thomas Murphy