ECONOMICS

Changing Patterns in Airline Industry and Manufacturers

Changing Patterns in Airline Industry and Manufacturers

Introduction

The current economic crisis has come to give it another twist to the airline industry. The recession has reached all sectors and the word used to describe the current situation and the immediate future is uncertainty. Today, the only certainty is that the world is in crisis, and this loss of confidence leads to a brutal drop in consumption, especially by companies that are the best customers of the airlines (Woodward and Woodward, 2006, pp. 289-312). In this environment of crisis most of the airline industry has embarked on capacity reductions and cost savings, knowing that these are the most effective measures to overcome the low cycles of the economy without going into a suicidal policy, seeking to fill planes any price.

Since the second half of the Nineties, traditional flag carriers have been privatized and adapted to new market conditions have become more efficient, have significantly reduced rates and, most importantly, have improved the service to suit customer demands. For 2009, the International Air Transport Association (IATA), which represents 230 airlines, has returned to set industry losses of $ 11,000 million and notes that the fall in demand in the first half of the year has been one of the largest in history (Harvey, 2007, pp. 195-218). In Iberia we know that reducing the supply is not enough, we must reduce costs to offset the loss of income, and for this we must have a flexible structure that facilitates, have contingency plans and means to enforce them rigorously.

However 2011 seems to be the year slight recovery for airline industry. The International Air Transport Association (IATA) announced that airline industry has achieved profits of 6,900 million dollars 900 the end of 2011. “While the global outlook for 2011 remains unchanged at 6,900 million dollars, regional differences become more pronounced. The overall margin of 1.2% indicates how difficult the battle for profitability in our business,” said the director general of the entity at a news conference (Morrell, 2002, pp. 256-295).

Aims and Objectives

The objective of this study is to find the actions and reactions of the airline industry to the economic downfall. Also to know the strategies those are followed by the airline industry to coup up with economic downturn.

Structure of the research proposal

This research defines the main problems that were faced by airline industry and manufacturers, and also the counter action by them to overcome these financial crises. This study will help readers to identify the main issues related to airline industry and then strategies by the industry to come out of this situation.

Literature Review

According to the American aircraft manufacturer “Boeing”, the number of orders for commercial aircraft has recorded a big drop last month because of the economic recession worldwide. Boeing is the second-largest aircraft manufacturer in the world, it received 18 orders last January, down by 72% over the same month last year, in which company got 65-orders, but the number of aircraft has been delivered ...