The Jet Age: The Jet Age And The Airline Industry

Ben Kriegsman Block B The airline industry has an incredibly intricate market ruled by consumer need and firm greed. The airline industry utilizes an oligopoly style market structure and airlines often use certain price discriminations to obtain the most revenue from their services. Externalities also weigh into the airline industry. Competition amongst airlines is incredibly fierce and only those who are thirsty for business and cold hard cash will survive within the terminal walls and jetway halls. Since the Jet Age, airlines have been entering and existing the airline industry. Some have been in business since the very beginning. For example, United airlines was founded almost twenty-five years before the jet age took off, and due to an incredible amount of money that the airline had by being one of the first airlines predating the Jet Age, was able to buy new jets and assert itself as one of THE giants of air travel by the late 1950’s. But the introduction of new technology paved the way for issues regarding externalities, and production of these new technologies. ("Assessing the external environment - Responding to a changing external business environment - United Airlines | United Airlines case studies and information | The Times 100", n.d., p. 1) The beginning of the Jet Age offered an intense opportunity for new firms to open or expand, producing new products from jet engines to structural parts, from radar technology, to reclining seats. According to research done by the Air Transportation Action Group, “It has been estimated the airline industry supports a grand total of 29 million jobs” (Hanlon, 2007, p. 1). This statistic proves how dependent the world is on the airline industry, for jobs and travel, as well as r... ... middle of paper ... ...ther competitors by sharing scarce resources including brand assets and market capability, enhancing service quality and, thereby, improving profitability” (2000, p. 137). Airline alliances form to improve companies’ combines value by “(a) achieving or preserving greater economies of scope than they could do individually; (b) improving ‘seamlessness’ of their multiple offering; and (c) increasing their effectiveness by combining frequent flyer programs and airport clubs” (Kahn, 2004, p. 64). These alliances, in turn, expand each member’s routes beyond the normal range and allow for seamless service for customers (Oum et al., 2000, p. 138). None of this would be possible without a free market, however, and after 1978, the airline industry started to see a boom in revenues and inter-firm cooperation after the Airline Deregulation was passed (Smith & Cox, 2008, p. 1).