Industry - The nature of the service

The Airline Industry is a service industry but due to all the equipment and facilities involved in transportation, it is easy to lose sight of that fact. Airlines perform a service for their customers-transporting them and their belongings (or their products, in the case of cargo customers) from one given point to another for an agreed price. The objective is to provide a service at a price that people are willing to pay and to keep costs below that price so that a profit can be made.

Industry - Information about Customers and Channels of Distribution

There are several types of airlines, defined by the type of service they offer, annual revenues and the type of aircraft they use. All federal safety requirements are pegged to aircraft size.

Major Airlines earning revenues of $1 billion or more annually in scheduled service. They generally provide nationwide and in some cases worldwide service. There were 12 major U.S. airlines in 1997:

Delta, United, American U.S. Airways, Southwest, Northwest, Continental, Trans World, American West, Alaska, Simmons, and Reno.

National carriers are scheduled airlines with annual rev

Industry - Factors that Influence Demand

By 1993, Southwest had spread to 34 cities in 15 states with 141 planes and each made 11 trips per day. It used only fuel-thrifty 737's and concentrated on flying large numbers of passengers on high-frequency, one-hour hops at bargain fares. Southwest shunned the hub-and-spoke systems of its larger rivals and took its passengers directly from city to city, often to smaller satellite airfields rather than congested major metropolitan fields. With rock-bottom prices and no amenities, it quickly dominated most new markets it entered.

U.S. Market: The U.S. market has not matured yet and it is still growing.

http://books.nap.edu/html/airline_dereg/pdf/TRBExec.pdf

Thin Profit Margins The bottom line result of all of this is razor thin profits, even in the best of times. Airlines through the years have earned a net profit between one and two percent compared to an average of five percent for U.S. industry as a whole. The cost of providing the transportation service to customers is almost as high as the price they are paying. For the airlines, earning enough profit to satisfy stockholders and invest in the equipment and facilities needed for the future is a real challenge.

· Service With: 308 Boeing 737 jets as of Oct. 31, 1999

· Headquarters - 2702 Love Field Drive, P.O. Box 36611, Dallas, TX., 75235

A Service Industry: Large sums of money are required not only to get started but also to continue since all of an airline's equipment at some point needs to be replaced. Most equipment is financed through loans or the issuance of stock, rather than purchased outright. Increasingly, airlines are leasing equipment, including equipment they owned previously but sold to someone else and leased back

(2) Charles A. Jaffe, "Moving Fast By Standing Still," Nation's Business (October 1991): 58

Ind - The Functions Served by the Prod/Why Custs Buy the Prod's or Servs.

Some common words found in the essay are:
Technological Trends, Postal Service, Wright Amendment, Airline Industry, Profit Margins, United Continental, Service Mmostly, Distribution Channels, Sales Marketing, Buyer Tastes, airline industry, air travel, travel agents, southwest airlines, major airlines, international markets, international travel, customer service, business travel, love field, computer reservation systems, rises falls significantly, expansion world trade, world trade rapid, rapid economic growth,
Approximate Word count = 5322
Approximate Pages = 21 (250 words per page double spaced)