U.S. Airline Industry Analysis Essay Example | Topics and Well Written Essays - 1750 words

U.S. Airline Industry epitome - Essay ExampleThe US oxygeniselines attention again returned to profitability track by 1995 and continued this maturement until the close of the 20th century. However, the 2001 terror attack together with a depressed world economy get on worsened the growth status of the US airlines industry. This paper will critically analyse the US airlines industry using international business theories and other strategic frameworks. A critical analysis During the start out stages of the US airline industry, three airlines namely United Airlines, American Airlines, and TWA were in charge of transcontinental routes. In 1938, the urbane Aeronautics Board (CAB) was established with intent to manage the structure of the industry (Dempsey, 1979-80). The CAB set escapism fares on the ground of monetary value plus a fixed margin and hence aircraft operators could pass cost increases to customers. In 1970, rampant increase in fuel costs and political shifts towards e conomic liberalization created the urge for a total reform of the airlines industry. The development of contestable market theory also contributed to this strategic shift. harmonize to this theory, industries did not need to be war-ridden structured in order to result in competitive outcomes (Grant, 2002). ... Hence, this strategic shift might assist them to operate more number of aircrafts using the same heart and soul of resources. As regulators argued, the deregulation resulted in refreshful entries and price competition. In the words of Grant (2003, p. 31), although the deregulation scheme was potential enough to improve the declining industry growth, some unexpected contingencies like oil shock of 1979 and the air traffic controllers strike of 1981 caused severe difficulties to the US aviation industry. In order to overcome these troubles, aircraft operators across the US widely adopted mergers and acquisitions approach as they believed that combined operations would trim down operating costs. As Heimlich (2011) argues, M&A approach significantly assisted the US airline industry to overcome several(prenominal) cultural barriers. The hub and spoke system introduced in 1980 greatly benefited the US airlines industry to increase its operational efficiency, thin maintenance costs, establish dominance in specific regional markets, and to place barriers to new entrants. The development of this new system can be linked to the strategic management theory, which argues that a change creates novel combinations of luck requiring unstructured non-repetitive responses (Kahn, 2010). Introduction of low cost carriers became a potential threat to the industry by the beginning of 1990s and hence the countrys major airlines extremely struggled to confront with such budget airlines. As discussed earlier, the deregulation Act directly led to the evolution of a competition era and the major aircraft operators offered roughly similar facilities to their customers. As a result, travellers could not easily distinguish between the offerings of