Essay About Major Forces And Global Airline Industry

Global Airline Industry
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Introduction and Overview
Peter P. Belobaba and Amedeo Odoni
This chapter presents an introduction to the global airline industry, its evolution and
current status. The major forces shaping the industry are described, including deregulation
and liberalization worldwide, along with some important recent industry challenges,
such as the severe financial problems that the industry has faced since 2000, which were
followed by restructuring of some of the industrys largest airlines. Looking ahead, the
industry still faces major challenges, including unprecedented fuel price volatility, a global
financial crisis and weakening demand for air travel as economic growth slows. Infrastructure
capacity poses a major constraint worldwide and threatens continued evolution
and long-term profitability. The final section provides a brief overview of each of the
other chapters of this book.
1.1 Introduction: The Global Airline Industry
The global airline industry provides a service to virtually every country in the world,
and has played an integral role in the creation of a global economy. The airline industry
itself is a major economic force, in terms of both its own operations and its impacts on
related industries such as aircraft manufacturing and tourism, to name but two. Few other
industries generate the amount and intensity of attention given to airlines, not only by
those directly engaged in its operations, but also by government policy makers, the news
media, as well as its billions of users, who, almost to a person, have an anecdote to relate
about an unusual, good or bad, air travel experience.
During much of the development of the global airline industry, its growth was enabled
by major technological innovations such as the introduction of jet aircraft for commercial
use in the 1950s, followed by the development of wide-body “jumbo jets” in the
1970s. At the same time, airlines were heavily regulated throughout the world, creating
an environment in which technological advances and government policy