The Us Airline Industry 2009

The U.S. Airline Industry in 2009

Air travel is one of the major industries in the world and a highly aggressive sector. Air travel began in the year 1909 and by a century later U.S. airlines were failing. In the year 2009, there were at least 151 companies within the air travel business. Out of these 151 companies seven dominated the playing field; United, American, Delta, Northwestern, Continental, U.S. Airways and Southwest. What is causing the airlines to plummet? Is the turbulence being caused by poor financial management, tough economic times or the threat of terrorism? If a solution is not identified numerous airlines will file for bankruptcy.

Synopsis of the Case

The U.S. airline industry is facing one of the most daunting challenges in its 100 year history. The tragic events that conspired on September 11th and the financial downward spiral of the economy in 2008 led to a decline in passenger traffic, increased costs for labor, fuel, equipment and facilities. The U.S. Airlines needed to find a way to lure customers back on their planes by looking at their costs and re-evaluating their strategies.

Relevant Factual Information about the Problem or Decision the Organization Faced

All U.S. Airlines had a dilemma on their hands: bring their company or industry back to the profitable way it once was by identifying the problems holding it back. "Years of operating losses, restricting costs and support for underfunded retiree benefits had resulted in an erosion of equity and build-up of debt (Grant, 2010, p.31). Would fierce competition and the threat of bankruptcy looming over their heads on a constant basis be the normal approach to business?

Top officials at the U.S. Airlines had to look at the strengths and weaknesses to identify the competencies that would outline their company's strategy for the long term.

Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials

Even though, U.S. Airlines had been in financial trouble before, this downward spiral was unexpected and rapid. Top officials moved their attention, "to the longer term prospects of the industry" (p.31). Minor competitors, "such as Southwest and Jet Blue" (p.31) were not experiencing the economic blows like their counterparts because of their,