US airlines industry is going through the toughest times in history. But, even amid such turmoil, a few like southwest are thriving, offering valuable lessons to the tumbled giants.
The US aviation industry is passing through precarious times. Flight delays, mishandled baggage, general and other customer service glitches have taken their toll on the already beleaguered players. What's more, the September 11 attacks have further worsened the situation, giving way to heavy retrenchments and bankruptcy petitions.
Though the financial problems of the industry began well before September 11, the aftermath of the attacks intensified the impact of several key problems. Post 9/11, the industry has been struggling to deal with the additional problem of falling traffic. This has had serious implications on the companies' operational viability with many of them slashing their schedules by one-fifth. Notably though, the industry's inherent problem became more visible after the disaster. The industry has been, for long, struggling to cope with a whole lot of issues like regulatory loopholes, a worldwide economic slowdown, and government's negligence. To add to the industry's woes, there has been an upward movement in fuel prices. The run-up in fuel prices following the crash of the oil markets in 1998 created a heavy financial burden in a relatively short time. While some airlines had successfully hedged fuel cost increases with futures contracts, they were not able to pass along the increased cost of fuel to consumers. |
