U.S. Airline Industry Essay

U.S. Airline Industry Essay

Length: 524 words (1.5 double-spaced pages)

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On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive.
Rivalry is one of the main issues in this industry. While rivalry may not typically doom an industry, the airline industry is too dependent on the ability to dictate price on its most popular routes to drive overall profitability. Airlines depend on these routes, called ‘city pairs”, to bring customers in as they are popular with them. Airlines enter these routes, hoping to attract these customers, which puts too many seats for these city pairs, thus making supply exceed demand. To compete, airlines drop their fares, many times to the point of eliminating profitability. Airlines are then unable to pull out of the city pair because they would risk losing too many customers which they hopefully can build loyalty with so they will fly with them on profitable ...

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