Publication Year

2003

Keywords

Business, airlines, commodity, industry, management

Disciplines

Business | Strategic Management Policy

Abstract

The intent of this honors thesis will be to show that U.S. commercial airline management has failed to grasp the enormity of the business situation facing the airline industry after September 11th. The industry was facing a cyclical decline before September 11th as major suppliers had noted in early 2001. September 11th served as a strategic inflection point for the industry and turned the decline into a crisis which has had permanent and devastating ramifications. One of the major effects of the September 11th attacks was to accelerate the drive of the industry into a commoditized business where all that matters is low prices and the efficient delivery of passengers.

The commodity hypothesis is derived from business traveler trends which in recent years have switched from the major airline carriers to low-cost carriers as price has become the only datum of importance. The model has driven business travelers to low-cost carriers or substitute products such as video-conferencing or web-conferencing. Airline management has not responded effectively to the crisis, and appears to be unaware of the depth and criticalness of the problems they face. The very structure of the industry and strategy needs to be fundamentally changed. My analysis will consider a wide range of viewpoints from industry pundits to academia, on how airline management should be handling the situation, and how the industry structure and strategy needs to be changed for the industry to survive. After reviewing the current viewpoints, I will offer my own conclusions.

Department 1 Awarding Honors Status

Business Administration

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