Passenger Airline Industry

Passenger Airline Industry

Introduction

U.S has scheduled airlines according to the amount of revenue each generate from operations. The categories include the major, regional, and the national. The major refers to a market segment that includes major airlines that generate operating revenues of at least more than $ 1 billion annually. They generally provide nationwide services as well as worldwide services. For instance, American eagle, Alaska, Delta among others. Nationals are scheduled airlines with operating revenue of between $ 0.1 and $ 1 billion on an annual basis. Some airlines in this category provide international s and long-haul services.

However, majority of airlines in this category provide services to particular regions of the country. Regional category as its name implies are limited to a single region in the country. The airlines transport passengers and between the major cities of the region. Cargo carriers are designed to carry cargoes and not passengers. Designers refer to them as freighters in which they strip off the passenger seats to maximize on the cargo carrying capacity. The designers have also reinforced their decks to accommodate heavier luggage. They have other typical features for handling cargo such as rollers, extra large doors among others (Structure of the airline industry, n.d.).

External factors affecting the passenger airline industry

The passenger airline industry is facing many challenges both external and internal factors. Recently, strong supplier / buyer power characterize the industry. The intense competition among many emerging airlines has also affected the industry in a negative way. External factors affecting the industry have seen it become unprofitable which include the following issues.

Overall market conditions/regulations and government control

Certain categories of fare and route efficiency affect the market conditions. Studies indicate that airport congestions and dominance raise fares especially in time-sensitive segments of the city-pair markets. In routes dominated by airline alliances, studies reveal that the economy and business fares are higher. The effects of government control are vague at both the route level and the industry. Discounts fares tend to decrease while the rate of occupancy of aircraft seats and business fares increase with the role of government regulated carriers.

Security

International terrorists’ activities have affected the industry a lot. The activities include planned bombing of passenger airplanes, hijacking of the planes among other terrorist activities. Security before the 9/11/2001 was demanding, but after the incidence that took place in the US security concerns