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Supplier News - October 2008
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Foreign and domestic airlines: factors impacting operations
While economic factors have impacted airlines in the United States, some foreign airlines are ordering larger planes with more amenities to add to their fleets. It seems unlikely that such differences should be seen in one industry, but explanations abound.
First, the distance flown per route is significant. Long overseas flights are more profitable for airlines than domestic routes and two-thirds of flights flown by U.S.-based carriers are domestic. Additionally, business- and first- class seats are where profit is generated, so foreign airlines often cater to these travelers.
Moreover, economic principles are at work. While the U.S. is on the verge of recession, Middle Eastern economies are not slowing at such a pace. These economies need to import goods and labor—by plane. The common denominator for all airlines is the cost of oil, which is traded in dollars. Because the U.S. dollar has weakened significantly in the world market, the U.S. airlines suffer the most.
Finally, differentiators are apparent in service. U.S. carriers fly fleets of older, larger planes making them less efficient. And, at a time when U.S. carriers are charging for services previously thought to be basic, Asian and Middle Eastern airlines are focusing on service and special amenities to make travel easier.
As is becoming more apparent day by day, the world economy is in a time of shift. This is an interesting era to keep an eye on the skies and see several factors that can affect not only how travelers get from one place to another, but how the industry alters to flux with the times of change.
Sources: ABC News, Worldnews.com
