The Current Issues Faced by the United States Airlines Industry
TheCurrent Issues Faced by the United States Airlines Industry
TheUnited States Airline Industry, according to the Airline Data Project(2014) is one of the most dynamic, diverse, and perplexing airlineindustry in the entire world. It is fast-evolving, capital intensive,labor-intensive, highly affected by the flow and ebb of the businesscycles, and hyper-competitive. It has managed to cling to the top ofthe list of the best airline industries in the world. Nevertheless,it has its own shares to the social and environmental issues in theairline industry. Henceforth is a discussion of the many social andenvironmental issues that the US Airline Industry have and iscurrently facing. Not that it is important to gain a betterunderstanding of such challenges in order to create sound solutionsfor them. The information in this research, therefore, can serve asbases for future, more detailed research about the issues andsolutions for the social and environmental issues of the saidindustry.
2.1Traffics: Traffic Delays and Cancellations
Oneof the major reasons why air travel is favored over some othertransportation mode such as via boat is its speed. Nevertheless,there are instances that due to some unfortunate circumstances suchas terrorist threats, whether disturbances, and technical issues,some flights get delayed. According to the research conducted by theAirlines for America (2014) and Guy (2010) the average cost of flightdelays in the US Airlines Industry is approximately $32 billionannually. Half of this lost is shouldered by the customers inindirect ways, such as not being able to go to urgent businessmeetings, and lack of productivity specially when they are asked tostay within the airlines for various reasons and they are not givenrefunds. Hence the effect is more than just economically but alsosocially, as such delays could result to distress, more particularly to the customers who are directly involved. This issue is veryimportant for airline industry to address as it affects customerssatisfaction with the industry’s services and hence itscompetitiveness over other modes of transportation.
Eversince 9/11 there have been doubts about the capacity of the USAirline Industry to keep its customers safe from terrorism. It shouldbe noted however, that such incidents are rare events throughout theAmerican aviation history, yet it did struck fear in the hearts ofAmericans and hence terrorism in airline industry remains an issueuntil today (bmo.businessmonitor.som,date). Addto the issue of terrorism the issue over gun control whichcontinuously affects airline security. While there are a number oflegislations on gun control over the past few years, it is lesslikely that there will be change to the status quo. In December 2012a mass shooting at Connecticut has prompted to the working togetherof factions which are pro and against gun control to encourage thelimit to access and responsible use of guns (bmo.businessmonitor.com,date). Theissue over gun control is very important to airline security, withoutappropriate legislations which will prohibit the carrying of gunsduring flight most passengers will continue to feel unsafe.
2.3Passenger Rights: Air Quality
Anotherissue which the US Airline Industry must continue to improve is themeeting of passenger rights which is measured using air quality orair quality rating. Based on a study conducted by Bowen and Headly(2012), there has been an improvement in the overall all air qualityin the US Airline Industry from 2010 to 2011. The parameters of airlquality measured are as follows with their respective scores: On-Time(8.63), Denied Boardings (8.03), Mishandled Baggage (7.92), andCustomer Complaints (7.17). Note that all the parametersaforementioned except for the first contribute negatively to airquality – positive scores means negative ratings. Based from theseratings, despite that there has been an improvement in air qualityfrom 2010 to 2011 it can be seen that the overall air quality isstill negative which implies that much is yet to be done in order toimprove it. Upholding customer rights or air quality is essential forthe airline industry as it also help determine its competitivenessover other transportation industry. More over lawsuits, which entaila significant amount of money to defend from can be avoided if suchrights are upheld.
Basedfrom a study conducted by Aviation Jobs (2014) the US AirlineIndustry must continuously strive to become “greener.” To becomegreener means that it should minimize its pollution production andincrease its efficiency in energy use. The study explains that secondto labor, fuel is the second largest expense of the US AirlineIndustry, which means that its fuel consumption is significantlyhigher compared to other industries. This also means that its energyusage is not very efficient. When fuel to energy conversion is notefficient the hydro carbon components of the fuel are not completelyburned resulting in air pollution. The most common air pollutantsresulting from such inefficient process include the hydrocarbons thenitrates and nitrites (NOx), the sulfates and sulfites (SOx), carbonmonoxide, and carbon dioxides. All these gases are harmful to humanhealth as well as to the environment, particularly to the ozone layer– these gases cause ozone layer depletion. There have been majorsuccesses in the reduction of air pollution emission in the USairline industry since from 1990s up to the present with theinvention of modern jets which have more efficient engines and higherpassenger loads, resulting to more than 75% reduction of the overallcontribution to air pollution of the US airline industry during theaforementioned time period. Nevertheless, this issue is yet to beaddressed as the amount of air pollution needs to be reduced still.Another environmental concern discussed in the said article is theincrease in the noise pollution created by the aircrafts.Nevertheless, with the invention of modern, quitter engines, andmodern aircraft design, the pollution has also been reducedsignificantly to about the same level is the air pollution.
2.5Threat of Bankruptcies
Therehas been and are threats with the sustainability of the US AirlineIndustry for the few decades. These threats are associated with itspossible bankruptcy fueled by two factors: the fear of investors tobe adversely affected by the most recent global recession and thethreat posed by labor unions. Based from an article written by HumanEvents (2012), labor unions continue to make actions which threatenthe halt of operations among businesses within the airline industryin the US. The growing concern is with regards to issues in thelaborer’s wages as they want an increase and the redundancyprograms implemented by different airline businesses during and afterthe most recent global economic recession. The investors are, inturn, threatening to withdraw their investments to the said industry.Note that the global recession has adversely affected the US’scurrency exchange, making the US dollar weaker against othercurrencies. All these events contribute negatively to thecompetitiveness of the US airline industry.
2.6Less Competition Due to Mergers
Themerging of different business within the airline industry has been amajor concern for customers. Accordingly, mergers cause theminimization of competition ultimately resulting in the increase inprices of air travel. There is also a high risk for monopoly to takeplace, and less innovation. Mergers have been the solution ofnumerous businesses within the airline industry to cope with theglobal recession, but this move was not taken lightly by differentgroups in the US. In 2013, the Economist (2013), reported that themerger between the American Airlines and the US Airways have met astrong resistance from the American public. Such resistance means thediscontent of the people with such actions from the differentbusiness sectors and hence it must be avoided as much as possible inthe US airline industry.
2.7Increase in Fuel Price: Increase in Cost of Travel
Whileit is normal for the price of oil in the world market to increase,the recent increase has been dramatic due to the growing scarcity andcompetition with imports by other countries such as China. At presentChina and the US are two of the world’s largest fuel oil importers.Note that without fuel oil, the airline industry will be paralyzed,hence they must purchase despite there is a growing scarcity in it.The businesses will change their rates for travel to balance theincreased expenses to their customers which increases thedissatisfaction to the latter. To describe the effects of increasingfuel oils in the world market to the US airline industry, Airlinesfor America (2014) through in its article entitled, “The Price ofJet Fuel and Its Impact on U.S. Airlines,” explained that a 1 centin a gallon will cost the US airline to lose $175 million if it notoffset to the customers, and an increase of $1 for a barrel couldresult to a loss of $415 million. The US airlines have a cumulativenet loss amounting to approximately $54 billion from 2001 to 2010.The Airlines of America also explained that the price of fuel oilremains volatile at present which poses great risks for the USairline industry. Hence this issue is still an on-going challenge.
Aircraftsafety is a major concern for all customers of the US AirlineIndustry, especially after the 9/11 incident. Nevertheless, thisissue has been well addressed since then by the improvement ofscreening procedures and the use of modern devices for detectingthreats. There have also been major improvements in the aircrafttechnology which makes the airplanes much safer today compared to thepast decades. In fact the current US Airline Industry is the safestaccording to Patterson (2012) I article to CNN, entitled, “U.S.airlines: Safer than ever?” With such improvements this issue is oflittle importance at present.2.9Illegal Drug TraffickingThereis also an issue about the use of air travel to import and exportdrugs into and out from the US. The said industry is highlyattractive to drug syndicates to carry out their drug traffickingoperations due to the fact that the said industry carriesapproximately 60 million people in the US annually. Such great numberof people is most conducive for drug trafficking as there is still achallenge in maintaining aircraft security and safety. Nevertheless,the improvements in the airline safety has dramatically decreaseddrug trafficking in the US airlines (United States Drug EnforcementAgency, 2004). Hence it is also a minor concern for the said industryat present.Conclusion Basedfrom the aforementioned discussion, it can be deduced that the threemost pressing issues are: fuel oil price increase, traffics: trafficdelays and cancellations, and passenger rights. My reason forselecting these over the others is that they are related to thecurrent popular issues: scarcity of fuel oil sources, environmentalissues and global warming, and the current lifestyle trend of people– they are getting busier. It is concluded in this study that allthe issues needs to be addresses as efficiently as possible for theydirectly impact the competitiveness of the US Airline Industryagainst other transportation industries and foreign airlineindustries.
Airlinesfor America (2014). Annual U.S. Impact of Flight Delays. Retrievedfrom:<http://www.airlines.org/Pages/Annual-U.S.-Impact-of-Flight-Delays.aspx>.
Airlinesfor America (2014). The Price of Jet Fuel and Its Impact on U.S.Airlines. Retrieved from:<http://www.airlines.org/Pages/The-Price-of-Jet-Fuel-and-Its-Impact-on-U.S.-Airlines.aspx>.
AviationJobs (2014). Airlines and the Environment. Retrieved from:<http://www.avjobs.com/history/airlines-and-the-environment.asp>.
AirlineData Project (2014). Welcome to the airline data project. Retrievedfrom: <http://web.mit.edu/airlinedata/www/default.html>.
Bowen,D.B. and Headley, D.E. (2012). Airline Quality Rating, 2012.Retrieved from:<http://www.airlinequalityrating.com/reports/2012aqr.pdf>.
Guy,A.B. (2010). Flightdelays cost $32.9 billion, passengers foot half the bill.UCBerkeley News Center.Retrieved from:<http://newscenter.berkeley.edu/2010/10/18/flight_delays/>.
HumanEvents (2011). Unions Threaten to Ground the Airline Industry.Retrieved from:<http://www.humanevents.com/2012/05/25/unions-threaten-to-ground-the-airline-industry/>.
Patterson,T. (2012). U.S. airlines: Safer than ever? Retrieved from:<http://edition.cnn.com/2012/04/04/travel/airline-safety/>.
TheEconomist (2013). Brace, brace. Retrieved from:<http://www.economist.com/news/business/21583666-merger-american-airlines-and-us-airways-meets-resistance-brace-brace?zid=303&ah=27090cf03414b8c5065d64ed0dad813d>.
UnitedStates Drug Enforcement Agency (2004). Drug Trafficking in the UnitedStates. Retrieved from:<http://www.policyalmanac.org/crime/archive/drug_trafficking.shtml>.