Aviation Essay Research Paper The airline industry — страница 3

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Southwest is considerably brighter than for ValuJet. The company has one of the highest safety records in the industry, and the company has also benefited from higher ticket prices and increased passenger traffic. The recent reinstatement of the federal excise tax is not expected to have a negative effect on Southwest demand since it has indicated it will increase fares in only 20 percent of its markets, but this will affect profitability. The company s strategy is to make up the difference of lower revenue with increased demand through its lower fares (Thorpe, 1996, p. 262). The airline industry has become one of the most competitive segments of our economy. The economic realities of operation costs versus passenger demand for cost-effective travel has forever changed the face

of the travel industry. After deregulation in 1978, the airline industry was forced to abandon its service-oriented philosophy and consider the competitive pressures since they affected the various companies bottom line. Price had suddenly become the benchmark in the airline industry. Companies such as Southwest and ValuJet recognized the potential for low fares with commensurably low levels of service. With the changing paradigms in the airline industry comes risk, not only to the individual airlines but also the public in general. At what point do the economic pressures of making a profit for the airlines affect passenger safety? If the trend toward more airline disasters continues and those accidents can be attributed to cost-cutting measures, surely Congress will intervene.

The airline industry must be disciplined in its approach to solving the economic pressures, while, at the same time stay focused on safety issues. If the airline industry is to survive and give the consumer choices, passenger confidence cannot be sacrificed for the sake of the bottom line!