Flying Through the Perfect Storm: Observations on an Airline Industry in Distress

The author notes in this article (Paragraph 10,151) that last year marked a historic nadir for the U.S. airline industry. Against the backdrop of a severe travel recession in 2001, the September 11 terrorist attacks threw the industry into a tailspin. By mid-2002, one of the six major airlines was bankrupt, another was on the edge, subject to securing major labor concessions and the rest were slashing jobs and capacity and struggling with mounting debt loads and "junk" credit ratings. From this starting point, the author assesses the U.S. aviation industry and offers his views on its future. Though U.S. commercial aviation has long been recognized as highly sensitive to the cycles of the overall economy, the aftermath of September 11 revealed--and greatly accelerated--a range of long-developing and ominous economic and business trends. These include long-term overcapacity, spiraling cost structures, pricing and product offerings that meet increasing customer resistance, and a resurgence of low-cost competitors. Add to this simmering mix the new post-9/11 "experience" of flying--a melange of new security "hassles", unpredictable delays, and just plain fear of flying--and the U.S. industry today finds itself at an inflection point no less significant than the onset of deregulation nearly 25 years ago. This means huge new challenges for the major airline industry, as well as for government policymakers and regulators. Not only are airline businesses demanding immediate "fixes" for costs and revenues, both large and small, but corporate strategists are also confronting fundamental "re-invention" and restructuring of the U.S. industry. Industry's ability to adapt and effectively respond to the new post-9/11 realities of travel is likely to determine the fate of today's post-deregulation airline industry model. The government's willingness and ability to support the airline industry at this critical juncture--both directly and through regulatory forbearance--will play a critical role in the outcome, the author concludes.

  • Corporate Authors:

    International Aviation Law Institute

    DePaul University College of Law, 25 E Jackson Boulevard
    Chicago, IL  United States  60604
  • Authors:
    • Gerchick, Mark
  • Publication Date: 2004

Language

  • English

Media Info

  • Media Type: Print
  • Edition: Transfer Binder 1: 2001 to 2004
  • Pagination: pp 4221-4238
  • Monograph Title: Issues in Aviation Law and Policy

Subject/Index Terms

Filing Info

  • Accession Number: 01149579
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jan 29 2010 12:03PM