Repetitive and Process Manufacturing
Conventional shop floor control functionality of an ERP system, for the most part, is suitable for discrete manufacturing. However, during last two decades, interest surged for Just in Time manufacturing technique which is suitable for high volume repetitive manufacturing. New functionalities in the ERP system were developed to support repetitive manufacturing so as to maximize […]
The Economic Effect of the American Deep Freeze
In the beginning of 2019, America has been hit by a weather phenomenon known as the Polar Vortex. This phenomenon has brought chilly winds and freezing temperatures to the United States. In many parts of the country like Chicago, the temperatures have hit historic lows and were close to -50 degrees! The daily life of […]
Warehouse and Materials Management – Need and Scope
Introduction Purchase of raw materials is an integral part of any business, i.e. manufacturing organization or service organization. Purpose of raw material is to be converted into finished goods for selling, but after purchase and before selling, they need to keep in safety and good care. The timeframe of storage can be short period or […]
The Economics of Nuclear Weapons
The recent India Pakistan skirmishes have brought the issue of a nuclear Armageddon to the forefront of international politics. The news channels in both countries, as well as the international media, have been discussing the possibility of the situation escalating into an all-out nuclear war. The question of the futility of such a war has […]
Marketing Channel Systems – Meaning and Important Concepts
Introduction The last two decades have changed the way business is getting conducted. Some businesses are still using traditional channel systems but advent of the Internet has revolutionized distribution channels. Companies are changing business models to leverage Internet advantage. With open proliferation of information, customer expectations are reaching new heights. Companies need to figure out […]
It is an open secret that airlines all over the world are bleeding due to various reasons. They range from overcapacity and the intense competition or fare wars and price cuts by lower cost airlines to the fact that operational expenses have gone up so much that profits are hard to come by. Added to these factors is the very real aspect of the global economic slowdown taking a toll on the airline industry, which never really recovered from the post 9/11 knock down of its profitability.
The point here is that though the appearances of the airlines and their marketing campaigns seem to suggest that they are doing rather well, the reality is otherwise.
Consider the example of many top-notch airlines like United Airlines, American Airlines, and Air India that have either become bankrupt or had to be rescued by the governments because of humungous losses.
Further, as the case of many airlines like Singapore Airlines shows, the survival strategy is one of trying to scrape through with enough profits so as to not tank into the red.
Apart from this, there are many airlines like Kingfisher and Jet Airways in India that are teetering on the edge and either are entering into alliances with foreign partners or are in the process of liquidation.
The global airline industry has also been hit because of the high price of ATF or Aviation Turbine Fuel. The increase in the price of the oil and its derivative, the ATF has especially hit hard those airlines in Asia and Africa that are dependent on imports paid for in hard currency or dollars.
Of course, the situation in Asia Pacific is no different as airlines like Qantas are struggling with high employee costs and an inability to radically downsize owing to opposition from the government.
Even in the case of European Airlines like Air France, Lufthansa, and KLM, they have been forced to curtail their routes and enter into code share agreements with local airlines wherever possible so that they do not lose landing and flying rights to destinations.
Apart from this, the fact that there has been tremendous overcapacity in the airline sector without corresponding growth in passenger traffic is another reason why the global airline industry is faltering.
The point here is that in anticipation of growth in passenger traffic, demand that was thought would materialize, many airlines added extra capacity, and concomitant with this, there was an expansion of many international airports. When the expected demand did not materialize, the result was that the global airlines were saddled with overcapacity and underutilization of its fleet of aircraft.
The other aspect about the falling fortunes of the global airline industry is that the deliveries of next generation aircraft from manufacturers like Boeing and Airbus are being delayed because of factors that are interlinked to each other. This means that the next evolutionary step for Airlines is not happening in terms of next generation airline travel that was supposed to have revolutionized international business travel.
Further, with most revenues coming from Business Class and First Class passengers, the global airlines are concentrating their energies on providing these passengers with as many benefits as possible and neglecting the economy class passengers which has further eroded the overall demand.
Finally, the airline industry is also beset with several nonperforming partner relationships that were primarily drawn up and entered into as a means of cost cutting.
In other words, the dense and intricate network of relationships between airlines and aviation maintenance companies as well as the suppliers and the other outsourcing partners are not delivering as much value to the airlines as expected. This is another reason why the global airline industry is in what is known as a “death spiral” in industry circles.
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Cross Border Mergers and Acquisitions and Some Recent Trends in this Field
February 12, 2025
