Airline Industry Situational Airline Industry Situational AnalysisAnalysis

Group B4Ayanna Mills

Chuck NewtonVicky Pan

Situation AnalysisSituation Analysis

Industry is at a turning point.Interrelationships between revenue

generation, cost structures and productivity, operational delays, and stringent security requirements are all major contributors to the current crisis in the airline industry

Critical ProblemsCritical Problems

Airlines Inability to Generate Adequate Revenue

Operating Costs and Productivity ProblemsOperations

Decreased Demand for Air Travel– Due to overall economic downturn

“Hassle Factor” – Increased passenger times due to increased

security requirements

Alternatives to Air Travel – Cheaper alternatives available

Revenue ChallengesRevenue ChallengesRevenue ChallengesRevenue Challenges

Congestion Related Delays– 15-20% reduction in airline capacity

Security Related Delays

Operating ChallengesOperating ChallengesOperating ChallengesOperating Challenges

Low-fare AirlinesLabor and Management RelationsIncreased Labor Negotiation Process

Cost ChallengesCost ChallengesCost ChallengesCost Challenges

Improve Customer ServiceEntrance into Discount Airfare MarketAchieve Meaningful Labor Cost DeductionsProductivity Improvements

OpportunitiesOpportunitiesOpportunitiesOpportunities

SWOTSWOT

Strength Weakness

Opportunity -Strong Cash Reserves -Brand

Recognition -Terminal Rights

at Busiest Airports

-Inability to Generate Revenue

-Cost Structure and Productivity

Threat

-Health and

Safety -Alliances

-Lower Demand for Air Travel

No Single Solution to Current Airline Industry Situation

Inability to generate Revenue due to security concerns

Perceptions of Poor Service Increases Attractiveness of Low-Fare Airlines

ConclusionConclusionConclusionConclusion