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    Industry Life Cycle: Key Issues

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    After deregulation in 1978, many new airlines entered the market and mileage flown increased steadily through the 1980s and 1990s as the industry grew. Major airlines consolidated through mergers and hub-and-spoke routes to gain efficiency. However, high costs, overcapacity, and new low-cost carriers led to crises from 2001-2005 before restructuring helped renew growth by 2007, though rising fuel and labor expenses along with limited economies of scale still pose challenges.

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    Industry Life Cycle: Key Issues

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    coursework
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    After deregulation in 1978, many new airlines entered the market and mileage flown increased steadily through the 1980s and 1990s as the industry grew. Major airlines consolidated through mergers and hub-and-spoke routes to gain efficiency. However, high costs, overcapacity, and new low-cost carriers led to crises from 2001-2005 before restructuring helped renew growth by 2007, though rising fuel and labor expenses along with limited economies of scale still pose challenges.

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    After deregulation in 1978, many new airlines entered the market and mileage flown increased steadily through the 1980s and 1990s as the industry grew. Major airlines consolidated through mergers and hub-and-spoke routes to gain efficiency. However, high costs, overcapacity, and new low-cost carriers led to crises from 2001-2005 before restructuring helped renew growth by 2007, though rising fuel and labor expenses along with limited economies of scale still pose challenges.

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    Download as docx, pdf, or txt
    13 views1 page

    Industry Life Cycle: Key Issues

    Uploaded by

    coursework
    After deregulation in 1978, many new airlines entered the market and mileage flown increased steadily through the 1980s and 1990s as the industry grew. Major airlines consolidated through mergers and hub-and-spoke routes to gain efficiency. However, high costs, overcapacity, and new low-cost carriers led to crises from 2001-2005 before restructuring helped renew growth by 2007, though rising fuel and labor expenses along with limited economies of scale still pose challenges.

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    Industry Life Cycle

    After the introduction of the Airline Deregulation Act, October 1978, there was a flourish of new
    airline companies. During the 1980s and 1990s there was an increase in the mileage flown at a
    trend rate. The industry gained competitive advantage by enabling Hub-and Spoke System,
    mergers and acquisitions in the industry. With high cost structure the industry was also prone to
    competition by new-low cost entrants, periods of slack demands, and considerable excess capacity.
    During the crisis period from 2001 to 2005 the major airlines made tireless efforts to control cost
    structure. The industry shows some positive movement its growth in 2007 which indication of
    further growth opportunity to reach maturity.

    Key Issues

    1. Rise of industry’s jet fuel cost and labor cost.


    2. Few economies of scale in the industry since deregulation.
    3. Rise of competition in the industry from budgeted and bankrupt airlines.

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